I beleive that the financials for our hoa are being reported incorrectly but I'm not positive. The amount over/under budget is added or subtracted from the retained earnings each month it changes the retained earnings ending balance. Correct? If that is true then each month the ending balance of the Retained Earnings/owners equity will be the beginning balance of the next month. Correct.?
If this is correct then why would the beginning balance be the same from month to month in the R/E or Owners Equity Account. Is it because the over/under is just to give us an idea of where we stand without actually making the entries until the actual amount over/under is determined at the end of the year? Is this method in accordance with GAAP?

To follow GAAP is it appropriate to Net the over/under with the Reserve Expenditures to get the ending over/under budget entry for the end of the year?

Is it acceptiable to report CD interest earned on Reserve Funds which are intended for a specific use to be reported as income on the operating account budget? These funds are NOT spendable by the operating account but may be spent on Reserve Expenses only after the CD Matures. If reporting it on the operating accounts budget as income is wrong then how would one go about correcting the errors?