What level of financial reporting is required of my condominium association and does my board need to pay for audited financial statements?

By July 24, 2014Articles, Case Study

Issue: What level of financial reporting is required of my condominium association and does my board need to pay for audited financial statements?

Answer: This issue is governed by Florida Statutes Chapter 718, the Florida Condominium Act (the “Act”).

Section 718.111(13) of the Act requires the association to prepare an annual financial report and make it available to the members. The level of financial reporting is governed by the associationʼs total annual revenues. For associations with revenues between $100,000 and $200,000, the Act requires “compiled” financial statements. Only when an association reaches $400,000 (or more) in annual revenues does the Act require audited financial statements on an annual basis.

The board may opt to perform a higher level of financial reporting without member approval. For instance, if the association is only required to perform “compiled” statements under the Act, the board can vote to have “reviewed” or audited statements.

On the other hand, the association can opt for a lower standard of financial reporting but only with a majority of the voting interests at a duly called meeting of the membership (at which a quorum is present). For example, if the association is required to perform “compiled” statements, the members can vote to perform only a report of cash receipts and expenditures. This vote must take place before the end of the associationʼs fiscal year and is effective only for that year (but can be effective also for the following year if the members so elect). The membership cannot waive the associationʼs required financial reporting for more than three (3) consecutive years.