It’s time to tell the members of the association all about the association’s finances, like it or not. Both the Florida condominium and homeowner statutes mandate the following:
Within 90 days after the end of the fiscal year, or annually on a date provided in the bylaws, the association shall prepare and complete, or contract for the preparation and completion of, a financial report for the preceding fiscal year. Within 21 days after the final financial report is completed but not later than 120 days after the end of the fiscal year or date as provided in the bylaws, the association shall mail to each unit owner or hand deliver to each unit owner, a copy of the financial report or a notice that a copy of the financial report will be mailed or hand delivered to the unit owner, without charge, upon receipt of a written request from the unit owner.
In English…most associations end their fiscal year on December 31st. So, by April 1st the association must have at least contracted for the preparation of the year end financial report. By May 1st, the association can mail the report to all owners or mail them a notice that they can get a free copy of the report by asking for it in writing.
The type of financial report to be prepared by the association varies and depends upon the association's budget. The higher the amount of the budget, the more detailed the type of financial report to be prepared. For example:
An association with total annual revenues of $150,000 or more, but less than $300,000, shall prepare compiled financial statements. This is basically a glorified disclaimer by the accounting firm as to the accuracy of the finances as presented to the CPA by management or the Board.
An association with total annual revenues of at least $300,000, but less than $500,000, shall prepare reviewed financial statements. In a review report, the CPA expresses a “limited assurance” — not an opinion — of the reasonableness of the financial statements.
An association with total annual revenues of $500,000 or more shall prepare AUDITED financial statements. A financial audit provides the highest level of financial statement assurance. An audit normally takes considerably more time than either a compilation or a review.
An association with total annual revenues of less than $150,000 and An association that operates fewer than 50 units in a condominium and 50 parcels in an H.O.A. regardless of the association's annual revenues, shall also prepare a report of cash receipts and expenditures.
Suppose a Board wants to prepare a financial report that gives the owners more detail than what they are required to receive? For example, the Board wants to provide an audit when only a compilation is required. In a condo - An association may prepare, without a meeting of or approval by the unit owners: a more detailed year end financial report than what is required by law. In an HOA – 20% of the owners can petition the Board for a greater report, a meeting must then be held within 30 days, and then upon approval of a majority of the voting interests of all parcel members, amend the budget or pass a special assessment to pay for the increased financial report.
Suppose however that the Board wants to provide the owners with a less detailed financial report than the owners are entitled to by law? For example, the Board doesn't want to spend money on an audit and only wants to provide a compilation? In a condo and an HOA ------only If approved by a majority of the voting interests present at a properly called meeting of the association, an association may prepare a less detailed financial statement than what is required by law. This can only be done for three years in a row and the vote must be taken within that fiscal year. So, if you didn’t vote to waive the audit for 2014, it’s now too late to vote.
In a condominium, failure to comply with the year end financial reporting requirements can subject the association to monetary penalties. The Division will certainly enforce compliance with the statute. In an HOA, if the association doesn’t prepare the report, nothing happens unless a unit owner winds up filing suit.