What to Heck is an Audit

By Leah Rogers, Corporate Treasurer, of Vesta

You ’ ve probably heard the

‘A’ word come up at a house meeting recently. That’s right co-opers, we’re headed into audit season! If you ’re new here, you ’re probably wondering what it means to be audited and how it will affect you and your house; and even if this ain’t your first rodeo, you might still have some questions! I hope this article can shed some light on the house audit process and what the heck your house treasurer has been up to all these months. Without further ado, let’s get into it!

What is an audit? An audit is a third-party examination of an organizations financial statements. We at the SHC audit our houses every four months as a way of ensuring accountability in the way that house funds are being used, as well as to assess any surplus or deficit for the quadrimester. The audit appointment occurs about one month after the end of the audit period, meaning that the audits taking place this October will assess financial statements for the period of May 1st 2021-August 31st 2021. Audits are performed individually by house and attended by your house’s treasurer, myself, and holly jo, the SHC’s Executive Director.

How does my house prepare for the audit? Each month, your house treasurer will complete a budget reconciliation that details all of the expenses and transactions that your house made during that month. Completing the reconciliation is the same idea as balancing your checkbook. When your house makes a purchase, it falls into one of your budgeted categories for the quadrimester, be that electricity, food & supplies, etc. At the audit, we can see if your house overspent or underspent in a category for the quadrimester and make recommendations for how to adjust your house’s budget moving forward. You can help your house treasurer prepare for the audit by submitting receipts and reimbursement requests to them on-time so that they can be accounted for on your budget reconciliation sheet. Your house treasurer should also prepare your house for the audit by reporting on house expenditures at house meetings and notifying you when you are not on track to stay within your budget for the quadrimester.

What happens at the audit appointment? The audit appointment is a time for myself and holly jo to walk through your houses expenses and income with your house treasurer. Expenses and income are visualized using your house’s audit sheet. Here is an example of what that looks like:

First, let’s talk about the blue box at the top of this spreadsheet. This box is used to calculate the total income collected by your house for the audit period. Prior to the audit appointment, those of us in the office will input the income that your house collected for each month. Income is separated into Carrying Charges (Assessment) Income and House Charges Income. Every year the SHC budgets to collect a set amount of income from your house in Carrying Charges based on the number of single and non-single spaces in your house. If your house is not full, you can request Vacancy Funds during the audit to cover the remainder of your house’s budgeted Carrying Charges. House Charges Income is comprised of both the house charges you pay based on your budget as well as any additional fines assessed to members by the house, which may include chore fines, small appliance charges, or others.

The column on the right is where we calculate gross income and deductions. Gross monthly income is comprised of House Charges, Carrying Charges, and Buyout Charges collected during the audit period. Deductions are essentially the money that is owed to the SHC, your own house, or perhaps another house, in the event that you (for example) share a trash receptacle, as is the case with Vesta and Orion. The first item deducted from your gross monthly income is the amount that we budget for Carrying Charges. This money is used to pay property-related expenses, staffing and overhead, maintenance, and other budgeted costs to keep our cooperative running. Maintenance and savings deductions are money that your house owes to itself. It is prudent to be spending your maintenance money on upkeep as well as putting money into savings for future house members. We deduct these amounts so that they are not returned to members in the event that there is a surplus, but are rather kept in your house’s bank account. Houses with fire alarm phone lines will have a phone lines deduction, as the office pays the bill for these each month and is reimbursed during the audit. Lastly, each house pays 2% of their budgeted Carrying Charges into the SHC Vacancy Reserve at each audit. The Vacancy Reserve is the money that we set aside to help out houses which may be facing financial difficulty due to low membership. These deductions are taken out of your house’s gross monthly income to calculate your gross house income, or what I like to call your “ pocket money. ” Once your pocket money is calculated, you can look to the green boxes to see how you spent it. By comparing the subtotals column to the semester budget column, you can see where your house may need to increase the budget or have the wiggle room to decrease it. Your house’s total expenses (at the bottom of the subtotal column) is then compared with your gross house income (pocket money) to calculate your surplus or deficit!