New WUCIOA, Accrual Basis Financial Statements & Audits

As you may have heard, legislators have made changes made to RCW 64.90, which are effective at various dates over the next few years. Of particular interest to us, as accountants and auditors, are the requirements for accrual basis financial statements and annual independent audits of an association’s financial statements, presented in RCW 64.90.530.

The original Washington Uniform Common Interest Ownership Act, RCW 64.90, was initially effective for associations formed on or after July 1, 2018. Other RCWs continued in place for associations formed prior to July 2018, including the old (RCW 64.32) and new (RCW 64.34) Condominium Acts and the Homeowners Association Act (RCW 64.38).

RCW 64.90.530 goes into effect on July 27, 2025, for the associations that were formed on or after July 1, 2018, “WUCIOA associations”, and for associations which have adopted significant portions of WUCIOA, (address with your association’s attorney for any clarity needed). Under RCW 64.90.530, as it relates to financial statements and audits, sections (1) and (2):

1. The association must prepare, or cause to be prepared, at least annually, a financial statement of the association in accordance with accrual-based accounting practices.
2. The financial statements of the association with annual assessments of $50,000 or more must be audited at least annually by a certified public accountant (“CPA”). In the case of an association with annual assessments of less than $50,000, an annual audit is required but may be waived by unit owners other than the declarant of units to which a majority of the votes in the association are allocated, excluding the votes allocated to units owned by the declarant.

For other associations, the Act for these sections is effective January 1, 2028.

Accrual Based Financial Statements
In our experience, a significant number of associations do not prepare their monthly and/or annual financial statements using the accrual basis of accounting. Typically, CPAs performing annual financial statements audits, convert the association’s financials from the cash or modified cash bases to the accrual basis of accounting. United States Generally Accepted Accounting Principles (GAAP) are presented on the accrual basis.

Accrual basis financial statements include all revenue that has been earned, not just received. All expenses incurred should be recorded in accrual financials, not just vendor invoices that have been paid.

Newman CPA is ready to help you with these new requirements!

We are the HOA CPA Firm with a passion for providing top quality audit & tax services to community associations nationwide, their boards of directors & management companies.

We have created a unique and unparalleled experience by recognizing and responding to your specific needs. Workflow innovation with our HOACPA Client Portal, client and staff education, close involvement with industry groups, integrity and adherence to accounting and assurance standards provide a responsive, streamlined and effective process for you.

We listen to our clients. We know that responsiveness is extremely important to you.

The Newman Engagement Hub will save you time, reduce unnecessary emails, and keep your engagements moving forward efficiently. Our goal is to make this process as easy as possible for you and your team.

• Quickly navigate to specific engagements
• View an up-to-date list of outstanding requests
• Easily drag & drop documents or leave comments for our team
• Manage multiple associations from one easy-to-use tool