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YEAR END FINANCIAL REPORTING
By
Eric Glazer, Esq.
Published February 9, 2015
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.
Does your association comply with the statute?
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About
HOA & Condo Blog
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Eric
Glazer graduated from the University of Miami School of
Law in 1992 after receiving a B.A. from NYU. He has
practiced community
association
law for more than 2
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decades
and is the owner of Glazer and Associates, P.A. a seven eight
attorney law firm with offices in Fort Lauderdale, Orlando and
Naples.
The
firm also has satellite offices in Tampa and Fort Myers.
Since 2009, Eric has been the host of Condo Craze and
HOAs, a weekly one hour radio show on 850 WFTL.
See:
www.condocrazeandhoas.com.
He
is the first attorney in the State of Florida that designed a
course that certifies condominium residents as eligible to serve
on a condominium Board of Directors and has now certified more
than 8,000 Floridians all across the state. He is certified as a
Circuit Court Mediator by The Florida Supreme Court and has
mediated dozens of disputes between associations and unit
owners. Eric also devotes significant time to advancing
legislation in the best interest of Florida community
association members.
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