Condominium, cooperative, and homeowner associations have financial reporting requirements for each fiscal year. Specifically, associations must prepare and complete a financial report within 90 days after the end of the fiscal year, or annually on a date provided in the bylaws. Financial statements prepared in accordance with generally accepted accounting principles shall be based upon the association’s total annual revenues, as follows:
- An association with total annual revenues of $150,000 or more, but less than $300,000, shall prepare compiled financial statements.
- An association with total annual revenues of at least $300,000, but less than $500,000, shall prepare reviewed financial statements.
- An association with total annual revenues of $500,000 or more shall prepare audited financial statements.
Note that an association with total annual revenues of less than $150,000 shall prepare a report of cash receipts and expenditures.
Previously, the Condominium Act and Cooperative Act provided that associations with 50 units/shareholders or less were able to provide a report of cash receipts and expenditures. However, this exemption was eliminated as of July 1, 2017. Accordingly, smaller condominium and cooperative associations should review their reporting requirement given their total annual revenues.
Upon approval of a majority of the voting interest present at a properly called meeting of the association, an association may prepare a financial report that is more or less detailed than that required by law. Until July 1, 2017, condominium and cooperative associations were limited to undertaking a vote to three (3) consecutive years. The recent legislative session removed this limitation, thus enabling an association to vote to prepare an alternative financial statement as provided above. Note that such a vote must be taken before the end of the fiscal year and is effective only for the fiscal year in which the vote is taken, except that the approval may also be effective for the following fiscal year.
Community associations are encouraged to speak with their manager and Certified Public Accountant (CPA) regarding the above changes to the financial reporting requirements, and thereafter seek advice from an attorney experienced in representing community associations with any further questions they may have.