While a condo board receives most of the glory, grief and exposure it is the Finance Committee that does the most important work. These are the people doing necessary work to ensure your condo corporation remains financially healthy. They have financial expertise and a willingness to delve into financial details essential to efficient functioning of any condo corporation. The Finance Committee fulfills essential roles that include:
Expense Review – Annual
Over time condo budgets inevitably include expenses carried over from past years that may no longer be necessary. Money may be budgeted to support underutilized amenities, an excessive entertainment budget or a building contract that has not been renegotiated in some time. Reviewing expenses and recommending ways to cut costs or better manage the corporation requires time, an institutional history and financial acumen. Recommendations are submitted to the condo board with final decisions made after discussion.
It is the rare condo community unable to find ways to reduce expenses. There is always a use for money that becomes available.
Revenue Review – Annual
Condo corporations can generate revenue to supplement condo fees. This helps keep fees lower and provides funds that can be used for improvements.
Fees for rental suites, elevator use and party room rentals are currently popular. Guest access to certain amenities may be available for a daily or weekly fee. Where a unit exceeds the allowable number of residents, additional fees may be charged. Revenue sharing contracts may require renegotiation. Every additional dollar from these sources helps reduce condo fees.
It is convenient but not advisable to undertake expense and revenue reviews when the annual budget is prepared. This forces an arbitrary timeline inconsistent with thoughtful consideration and research. The best time for these reviews is a quiet period with no upcoming deadlines.
Random Audit – Periodic each year
Periodically request detailed documents for review. It may be all invoices or bank statements for a three month period. Another time it may be a review of cheques written or credit card charges. Having different individuals review financial documents keeps everyone on their toes. Look for expenses or disbursements that don’t make sense. Ask questions. Anyone seeking to improperly separate a corporation from its money may reconsider if they know documents are reviewed in this way. Financial manipulations and theft will likely be caught sooner with regular reviews of financial records.
Project and Contract Review – As needed
Any large contract or project should be reviewed by the Finance Committee before discussed by the condo board. A Finance Committee will evaluate costs in light of current budgets and available funds. They can develop a funding plan when available funds are insufficient.
To be effective, a Finance Committee requires active support of the condo board.