Future Association Management Needs
Current Operating Structure & Alternative Accounting Arrangements
Board Discussion Report | October 17, 2026
1. Current Operating Structure
Sussex Square currently operates under a hybrid management arrangement. American Dream Realty (ADR) provides financial administration through AppFolio, while the Board performs most other association management functions. Assessment collections are largely outsourced to Axela, with more serious cases handled by the Association’s attorney.
| Responsibility | Current Arrangement |
|---|---|
| General ledger and financial records | ADR using AppFolio |
| Monthly financial statements | ADR using AppFolio |
| Homeowner assessment accounting and delinquency reports | ADR using AppFolio |
| Bank reconciliations | ADR |
| Invoice processing and bill payment | ADR, subject to required Treasurer authorization |
| Physical check deposits | ADR |
| Routine delinquent collections | Axela |
| Escalated collections | Association attorney |
| Administrative communications | ADR and Board |
| Violation inspections and enforcement | Board |
| Contractor and maintenance oversight | Board |
| Governance and compliance | Board |
| Oversight of management company | Primarily President |
From this chart notice that the majority of the management agent’s responsibilities are accounting functions only. The question becomes, do we need a full service management agent or only an accounting firm to perform our functions as an association?
Current Management Expense
👉👉 $942.37 Monthly / $11,308 Annually (rounded) $86.99 Per unit annually
Does accounting / bookkeeping cost this much?
The current arrangement has also experienced operational inefficiencies following personnel changes at ADR. Increased Board oversight has become necessary to ensure timely completion of tasks and compliance with the Association’s established financial authorization procedures.
2. Three Alternative Accounting Arrangements
| Arrangement 1 | Arrangement 2 | Arrangement 3 | |
|---|---|---|---|
| Model | Association-owned HOA software | Accounting firm-owned software | Integrated accounting systems |
| Accounting records | Maintained in Association’s system | Maintained in accounting firm’s system | Shared or synchronized |
| Accounting firm access | Authorized user accounts | Firm’s own accounts | Accounts in one or both systems |
| General ledger | HOA software | Firm’s accounting software | Designated primary ledger |
| Financial reports | Generated in HOA software | Provided by accounting firm | Generated from synchronized records |
| Homeowner balances | Directly available | May require imports | Available through integration |
| Treasurer approvals | HOA software workflow, plus banking controls | Separate approval process or firm software | Depends on integration |
| Violation enforcement | HOA software | Separate HOA system | HOA system |
| Continuity when providers change | Strong, if records remain Association-controlled | Requires records transfer | Depends on data ownership and integration |
| Implementation complexity | Moderate | Low–moderate initially | Potentially high |
| Assessment | Preferred | Viable alternative | Conditional alternative |
Arrangement 1 — Association-Owned HOA Software
The Association subscribes to and controls its own HOA management software. An independent accounting firm receives authorized access to perform bookkeeping, reconciliations, financial reporting, and approved payment processing.
This model provides centralized records, clearer Board oversight, and continuity when accounting providers or Board members change.
Arrangement 2 — Accounting Firm-Owned Software
The accounting firm maintains the financial records in its own accounting system and provides financial statements and other reports to the Board.
This may simplify the firm’s work but can create duplicate records, separate homeowner account histories, and additional challenges when changing providers.
Arrangement 3 — Integrated Systems
The Association maintains its HOA management system while the accounting firm uses its preferred accounting software. Financial information is exchanged or synchronized between the systems.
This may offer operational flexibility but introduces integration costs, reconciliation complexity, and potential data synchronization problems.
3. Responsibilities Under the Preferred Hybrid Model
| Function | Accounting Provider | Board / Treasurer |
|---|---|---|
| Assessment posting | Process and reconcile | Review |
| Physical check processing | Deposit or arrange lockbox | Oversight |
| Electronic assessment payments | Reconcile and post | Oversight |
| Vendor invoice entry | Prepare | Review |
| Disbursement authorization | No | Treasurer approval |
| Approved bill payment | Execute within authorized limits | Oversight |
| Bank reconciliations | Prepare | Independent review |
| Financial statements | Prepare | Review |
| Delinquency reporting | Prepare | Review and coordinate with Axela |
| Violation enforcement | Not responsible | Board |
Financial control requirement: The software and banking arrangements must preserve the separation of duties required by the Association’s bylaws and insurance requirements for financial best practices, including Treasurer authorization of disbursements and independent financial review.
4. Assessment Payment Processing
A replacement arrangement should accommodate existing homeowner payment preferences while reducing manual processing.
| Payment Method | Proposed Handling |
|---|---|
| Mailed personal checks | Bank lockbox or designated deposit service |
| Bank-generated bill-pay checks | Lockbox or remote-deposit processing |
| Direct ACH payments | Automatic electronic collection and posting |
| Other electronic payments | HOA payment processor, subject to fees |
| Delinquent accounts | Continue using Axela and attorney as appropriate |
A lockbox service could significantly reduce the administrative burden of processing physical checks. However, its cost and integration with the selected HOA software must be evaluated.
5. Preliminary Recommendation
The preferred arrangement for further investigation is Association-owned HOA management software with outsourced accounting services.
This would allow Sussex Square to retain professional financial administration while establishing centralized records, consistent procedures, Board-controlled financial approvals, and improved continuity across Board and service-provider changes.
Before making a decision, the Board should compare the current annual management expense of approximately $11,308 against the combined cost of HOA software, independent accounting services, payment processing, mailing, and any necessary banking services.
This report proposes an operating model for evaluation. It does not recommend terminating the current management agreement or selecting a software vendor at this stage.
