What Should Condo Board Members Know About Financial Reporting?

Individuals who serve on the board of a condo are accountable for the association’s financial management and recordkeeping. Even if financial activities do not figure into people’s role or interest in board service, all board members need to recognize that service imparts a fiduciary duty of care in managing the association’s financing. Condo association financial reporting must be accurate and fully compliant with state laws governing condo management.

Timeliness

Delaying reports raise the probability of mistakes or errors. If current financial information is not unavailable, it may not be possible for prospective purchasers to obtain financing. When this type of problem forestalls sales, it could create liability on behalf of the association to a unit owner.

Budget Creation

Reviewing thorough financial statements is necessary to produce an accurate budget. Boards should review the expenses for each line item in each quarter before creating a budget for the next fiscal year. 

The information in financial statements can be a reflection of how well a board is serving the interests of the association. Condo owners who are part of a voting membership may want to see up-to-date audits at annual meetings in order to make an informed decision about who they would like to represent them.