Businesses are not the only ones that have to deal with accounting; this rule also applies to unit owners' associations (HOAs). In this text, we will examine what regulations govern the accounting of HOAs, how they differ and what accounting methodology such communities should apply.

An HOA is a legal entity primarily focused on the management of property that is not its own. Such communities are typical of apartment buildings, where each owner has his or her own apartment and, together with the other owners, a share in the common areas and grounds. The association is responsible for the maintenance and management of the whole building.

The size of the HOA may determine whether it is a micro or small unit, which depends on the size of the property, turnover and number of employees. If the assets do not exceed CZK 9 million, the annual turnover is less than CZK 18 million and the number of employees is less than 10, the JVU is considered a micro accounting unit.
HOA is obliged to keep accounting records, which may be of two types - tax records or (double) accounts. The accounting is the responsibility of the statutory body of the HOA, i.e. its committee or chairman. The JVU can process the accounting internally or hire an external accounting specialist.

Micro-entities may apply simplified accounting, which means limitations in recording provisions, valuation allowances, the use of fair values in the valuation of assets, or the maintenance of analytical and off-balance sheet accounts. Although it may sound tempting, simplified accounting is generally not recommended because of the reduced clarity, which can make it difficult for the members of the JVU to understand how the funds have been spent.

Accounting rules and laws for JVUs

The following rules and regulations govern the accounting of JUAs:

Act No. 563/1991 Coll. on Accounting,
Decree No 504/2002,
Czech Accounting Standards for Accounting Entities Accounting in accordance with Decree No 500/2002 Coll., as amended, and No 504/2002 Coll., as amended.
HOAs are obliged to keep accounts.

Chart of accounts and HOA timetable

HOA uses a chart of accounts for non-profit organisations that differs from the chart of accounts for companies. The chart of accounts is laid down in Decree No 504/2002 in the Third Annex.

The chart of accounts according to the Decree:

Class 0 - Fixed assets

Accounting groups:
01 - Intangible fixed assets
02 - Tangible fixed assets subject to depreciation
03 - Non-depreciable tangible fixed assets
04 - Intangible and tangible fixed assets under construction
05 - Advances made for intangible fixed assets
06 - Non-current financial assets
07 - Allowances for intangible fixed assets
08 - Rights to tangible fixed assets

Accounting class 1 - Inventories

Accounting groups:
11 - Material
12 - Inventories of own production
13 - Goods

Accounting class 2 - Financial accounts

Account groups:
21 - Cash in hand
22 - Cash in accounts
23 - Short-term loans
24 - Other short-term financial assistance
25 - Short-term financial assets
26 - Transfers between financial accounts

Accounting class 3 - Settlement relations

Accounting groups:
31 - Receivables
32 - Accounts payable
33 - Settlements with employees and institutions
34 - Tax, subsidy and other settlements
35 - Receivables from the company
36 - Liabilities to the company and liabilities arising from subscriptions for outstanding securities and deposits
37 - Other receivables and payables
38 - Transitional asset and liability accounts
39 - Allowance for clearing relationships and internal clearing

Accounting class 4 - Free

Accounting class 5 - Costs

Accounting groups:
50 - Purchases consumed
51 - Services
52 - Personnel costs
53 - Taxes and charges
54 - Other costs
55 - Depreciation, assets sold, creation and use of provisions and allowances
56 - Changes in inventories of own operations
57 - Activations
58 - Contributions made
59 - Income tax

Accounting class 6 - Revenue

Accounting groups:
60 - Revenue from own performance and from goods
64 - Other revenue
65 - Revenue from the sale of assets
68 - Contributions received
69 - Operating subsidies

Accounting classes 7 and 8
Entities shall use the accounts in classes 7 and 8 in accordance with the internal rules.

Accounting class 9
Equity, funds, profit or loss, reserves, long-term loans and borrowings, closing and off-balance sheet accounts

Account groups:
90 - Equity
91 - Funds
92 - Valuation differences
93 - Economic result
94 - Reserves
95 - Long-term loans and liabilities
96 - Closing accounts
97 - 99 - Off-balance sheet accounts
According to the chart of accounts, the JVU draws up a chart of accounts - in layman's terms, a list of all the accounts it will use. During the accounting period, the JUA may amend the chart of accounts.
Like other entities, JCEs are obliged to comply with the accounting principles.