Do we need an annual audit, and does management handle it?

It depends on your state, your governing documents, and your revenue, and the three levels of engagement are not interchangeable. A compilation organizes your numbers with no assurance. A review applies limited procedures. An audit is the full opinion, and it is the only one where an independent accountant tests the balances.

Many states set a revenue threshold above which a review or audit is required, and many declarations impose their own requirement regardless. Check both. Associations frequently do less than their own documents require because nobody has read them in a decade.

The Management Company typically coordinates the engagement rather than performing it — an audit of financials the company prepared cannot be done by that company. Coordination means recommending firms, producing the records, answering the accountant's questions, and getting the management letter in front of the Board.

Two things to ask. Whether coordination is included in the fee or billed. And whether the Board sees the management letter — the accountant's private note about control weaknesses — because that document is where you find out about the problems, and it does not always make it past the manager's inbox.