Proper record keeping is a necessity for good condo corporations. Without proper records there is no way to know the financial strength of a condo corporation, where money is being spent or if it is being stolen.
Financial information includes bills, bank statements, investment records, invoices and tax records. Combined they present a picture of the overall financial health of the condo corporation.
The most important information to monitor is condo fees received and cash balances in the bank or elsewhere. Next in terms of importance are long-term unpaid invoices, reserve fund expenditures and balance, unusual items such as overtime or special repairs, accounts payable and receivable, upcoming capital projects, and profit and loss statements which should be compared with prepared budgets.
Monthly reporting of this information is essential. Typically, these records are provided by the condominium manager or management company. The treasurer should be reviewing these documents which are typically available two or three weeks after the end of each month.
Problems tend to arise when there is a lack of reporting or reports are not reviewed.
Regular reporting makes it easier to identify changes from the norm. Higher than expected spending in one area or an unanticipated drop in cash balances should result in questions being asked. Unacceptable answers suggest potential problems that should be delved into.
Trends should identify a pattern of increasing spending or revenue declines that can be addressed before financial losses occur.
A smart and active treasurer is crucial to monitoring the financial status of a condo corporation and identifying problems before they become serious.
Condo owners also have a responsibility. Financial records are available to condo owners who should also be reviewing them on a regular basis. It is their money and how it is used that is recorded in these documents. Unfortunately, most condo owners are not interested in reading and understanding financial records.
Financial records should be retained for at least seven years. Where storage space is an issue, older records can be stored in electronic format so they can be referenced as needed.