Condo audited financial statements콘도 감사 재무제표

What is it?

Like a company, a condo corporation makes financial statements every year (reports showing the money that came in and went out, and what it owns and owes). Section 66 of the Condominium Act sets what they must include.

An independent auditor (an accounting expert hired to check the books) examines these statements every year and writes a report (s. 67 (1)). The auditor cannot be a director, an employee or the condo manager (s. 61). That is why they are called “audited” financial statements.

What is in them?

• A balance sheet: what the corporation has and owes at year end.
• A statement of general operations: the fees that came in and the running costs that went out during the year.
• A statement of changes in financial position.
• A statement of reserve fund operations: what went into and out of the reserve fund (the savings for major repairs).
• Prescribed information about the reserve fund study and the reserve fund, and the total paid to directors and officers.

What does the auditor check?

The auditor may see all of the corporation’s records and accounts (s. 67 (2)), and must say in the report if the statements do not follow the Act and the regulations (s. 67 (4)).

In particular, the auditor must state whether the reserve fund statement does not fairly present what is in the reserve fund studies the auditor received (s. 67 (5)).

Under the regulation, the statements must also compare the reserve contributions actually collected and the money actually spent with the amounts in the board’s reserve fund funding plan (Condominium Act, s. 94 (8)) (O. Reg. 48/01, s. 16 (3)). A shortfall against the plan shows up there.

How are they used when you buy?

1. The status certificate you get when buying a resale condo includes this year’s budget plus the most recent audited financial statements and the auditor’s report (Condominium Act, s. 76 (1) (i)).
2. Read the opinion part of the auditor’s report first. If it has a qualification or other reservation (exceptions or concerns), ask your lawyer what it means.
3. Check the statement of operations for a deficit, and the balance sheet for money the corporation has borrowed.
4. Compare the year-end reserve fund balance with what the reserve fund study recommends and with the board’s funding plan. A big gap can lead to fee increases or special assessments.

Things to watch

• The audited statements cover the last fiscal year that has been audited. For anything since then, check this year’s budget, the reserve fund balance (as of a month-end within 90 days of the certificate) and the rest of the certificate.
• A small condo of fewer than 25 units can skip the audit until the next annual general meeting if the turn-over meeting has been held and every owner agrees in writing (s. 60 (5)). An owner whose fees are 30 days or more in arrears cannot consent (s. 60 (6)). If there is no auditor’s report, ask why.
• Financial statements are not easy to read. Go through the numbers with your lawyer or an accountant.