In the world of community associations, this is a pretty important time of year. In most associations, the fiscal year ends on December 31st. The condo, HOA and co-op statutes provide:
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 sum, by the end of April, your association better have completed its year end financial
report so that the owners know how their money was spent. I can tell you that the Department
of Business and Professional Regulation takes this requirement very seriously and associations
who fail to have the reports ready can be subject to thousands of dollars in fines.
The question is….what type of financial report must your association prepare, and the answer depends on the size of the association’s budget. Associations with budgets between $150,000.00 and $300,000.00 must hire a CPA to perform a compilation. Associations with budgets between $300,000.00 and $500,000.00 must hire a CPA to prepare a review. Finally, associations with budgets of $500,000.00 or more must hire a CPA to prepare an audit.
By the way…..many of you reading this blog are getting ready or have already done your 2013 taxes. Guess what? Your association needs to do the same. Many boards of directors are surprised to learn that your association is required to file a federal tax return even though you are a not for profit corporation.
Are your associations complying with these laws? Are year end financial reports being prepared? Are the owners being made aware that these reports are available to them? How many of you even bother to take a look at them at all?