Washington's 2028 HOA Audit Mandate: What Every Association Board Needs to Know Now

On January 1, 2028, the legal landscape for every homeowners association and condominium association in Washington State changes permanently. The Washington Uniform Common Interest Ownership Act (WUCIOA), codified at RCW 64.90, will apply to every common interest community in the state, regardless of when it was formed. The older statutes that most associations currently operate under, including the Homeowners' Associations Act (RCW 64.38), the Washington Condominium Act (RCW 64.34), and the Horizontal Property Regimes Act (RCW 64.32), are repealed on that date.

For boards and community managers, the most consequential financial change buried in this transition is the annual audit requirement. Beginning in 2028, most Washington associations will be required by state law to obtain an annual financial statement audit performed by a certified public accountant. For a large share of the state's associations, this obligation cannot be waived.

This article explains where the requirement comes from, who it applies to, what it actually requires, and what boards should be doing between now and the deadline.

How We Got Here: WUCIOA, SB 5796, and SB 5129

WUCIOA took effect on July 1, 2018, but it initially applied only to communities whose declarations were recorded on or after that date. Associations formed earlier continued to operate under the legacy statutes, creating a patchwork where two neighboring communities could be subject to entirely different financial reporting rules.

In 2024, the Legislature ended the patchwork with Senate Bill 5796, commonly called 'WUCIOA for All.' The bill extends WUCIOA to every Washington common interest community effective January 1, 2028, and repeals the legacy statutes on the same date. Governing document provisions that conflict with WUCIOA are superseded by operation of law. No amendment is required for the supersession to occur, which means an association that does nothing will still be governed by WUCIOA on January 1, 2028, whether its documents reflect that or not.

In 2025, the Legislature passed SB 5129, which accelerated several governance and meeting provisions to January 1, 2026 and adjusted the exemption thresholds for small communities. The practical effect of these two bills together is a phase-in: certain operational rules already apply to all associations today, and the full statute, including the financial reporting and audit provisions, applies universally in 2028.

The Audit Requirement Under RCW 64.90.530

WUCIOA's financial reporting rules are found in RCW 64.90.530, and they contain three obligations boards need to understand.

First, accrual-basis financial statements are mandatory. Every association must prepare, at least annually, financial statements in accordance with accrual-based accounting. Many associations and management companies currently report on a cash or modified cash basis. That will no longer satisfy the statute. Accrual accounting recognizes assessments when levied rather than when collected, and expenses when incurred rather than when paid, which gives owners a materially more accurate picture of the association's financial position, including receivables from delinquent owners and payables the association has committed to.

Second, associations with annual assessments of $50,000 or more must be audited annually by a CPA. This is the core mandate. The $50,000 threshold is measured by annual assessments, not total revenue, and it is a low bar. An association of 100 homes assessing $42 per month crosses it. Most professionally managed associations in Washington, and a large number of self-managed ones, will exceed the threshold.

Third, and critically, the audit cannot be waived at or above the $50,000 threshold. Associations with annual assessments below $50,000 are also required to obtain an annual audit, but those smaller associations may waive it by a vote of unit owners holding a majority of the votes in the association, excluding votes allocated to units owned by the declarant. Above the threshold, there is no waiver mechanism. The board cannot waive it, the members cannot waive it, and governing documents that purport to waive it are superseded.

This is a meaningful departure from current law for legacy associations. Under the statutes being repealed, audit obligations varied by association type and formation date, and waiver provisions were common. After January 1, 2028, older condominiums that previously had looser or waivable requirements will need a CPA audit, and HOAs at or above the assessment threshold lose the ability to opt out entirely.

Who Is Exempt

The exemptions are narrow. Following SB 5129, communities with 50 or fewer homes and annual assessments not exceeding approximately $1,000 per home per year may qualify for reduced obligations, but only where the declarant included a good-faith assessment cap in the original declaration. Certain community types, such as commercial-only condominiums, are also treated differently. Boards should not assume they qualify for an exemption without a specific analysis. The default assumption for any association of meaningful size should be that the full WUCIOA financial reporting framework applies.

What Else Auditors Will Be Looking At

The audit requirement does not exist in isolation. WUCIOA layers in related financial obligations that will fall within the scope of the annual audit or the auditor's related procedures.

Reserve studies. WUCIOA requires associations to prepare and annually update a reserve study, with a site visit by a reserve study professional at least every three years, unless the community has nominal reserve costs or the cost of the study exceeds ten percent of the annual budget. The hardship waivers available under the old statutes largely disappear. Reserve study data typically feeds the required supplementary information presented with audited financial statements, and auditors apply limited procedures to that information.

Budget disclosures. Under RCW 64.90.525, the budget provided to owners must disclose whether the association has a compliant reserve study, how proposed reserve funding conforms to or deviates from the study's recommendations, and the current reserve deficiency or surplus expressed on a per-unit basis. Special assessments must go through the same owner ratification process as the annual budget, which means auditors will expect ratification documentation in the minutes.

Fidelity insurance. All associations must carry fidelity coverage, regardless of formation date or what the governing documents previously required. For an auditor evaluating internal control over cash and the risk of misappropriation, fidelity coverage and the controls surrounding it are directly relevant.

Why Boards Should Not Wait Until 2027

A first-year audit of an association that has never been audited is a substantially larger undertaking than a recurring annual audit. Boards that wait until late 2027 to engage a CPA will face several predictable problems.

Opening balances must be established. An auditor cannot opine on a fiscal year's financial statements without gaining comfort over the balances the year started with. For a first audit, that means audit work reaching into the prior year's records. Associations with incomplete records, unreconciled accounts, or a history of cash-basis bookkeeping will need cleanup work before an audit is even feasible.

The accrual conversion takes time. Moving from cash to accrual reporting requires establishing assessment receivable balances, allowances for doubtful accounts, prepaid assessments, accrued liabilities, and proper fund accounting between operating and reserve activity. Management companies serving many associations will be doing this conversion at scale, and the ones that start early will do it well.

CPA capacity is finite. Financial statement audits of common interest communities are a specialized practice area. Washington has a limited number of firms with genuine CIRA (Common Interest Realty Association) audit expertise, and the 2028 mandate creates a wave of first-time audit demand hitting that limited capacity all at once. Associations that engage early will have their choice of qualified auditors and reasonable fee arrangements. Associations that engage in the fall of 2028 for a calendar-2028 audit may find themselves choosing between inflated fees and firms without industry experience.

Early adoption is available. WUCIOA includes an opt-in procedure under RCW 64.90.360 that allows associations to amend their governing documents and transition to WUCIOA ahead of the deadline. Legal commentators have consistently recommended this path because it lets the board control the timing rather than absorbing the entire transition in a single compressed period. An association that opts in for fiscal 2026 or 2027 gets a practice run at the audit, the accrual conversion, and the reserve disclosures before compliance becomes mandatory.

A Practical Timeline for Boards

Between now and mid-2027, a well-prepared board should complete the following sequence. Confirm whether the association's annual assessments meet or exceed the $50,000 threshold, and if they are below it, decide whether the membership will vote to waive the audit or embrace it as a governance benefit. Direct the management company or bookkeeper to begin maintaining accrual-basis records if they are not already. Commission or update the reserve study so that current, compliant data is available for both the budget disclosures and the audit's supplementary information. Verify fidelity insurance coverage. Review the governing documents against WUCIOA with association counsel and consider the opt-in amendment. Finally, interview and engage a CPA firm with CIRA audit experience, ideally with enough lead time for the firm to perform interim procedures and flag record-keeping issues before year-end.

The Bottom Line

The 2028 deadline is fixed, the audit mandate for associations at or above $50,000 in annual assessments is non-waivable, and the supporting requirements, including accrual accounting, reserve studies, budget disclosures, and fidelity coverage, all interact with the audit. Boards that treat this as a 2028 problem will experience it as a crisis. Boards that treat it as a 2026 project will experience it as a manageable transition and will enter 2028 with financial reporting their owners can actually rely on.

Russell CPA PLLC specializes in audits of homeowners associations and condominium associations and is accepting Washington engagements ahead of the WUCIOA transition. If your board or management company wants to discuss first-year audit readiness, an accrual conversion, or engagement timing for fiscal 2026 and 2027, contact us for a consultation.

This article is for general informational purposes only and does not constitute legal or accounting advice. Associations should consult qualified counsel regarding the application of WUCIOA to their specific circumstances.