The time of year is here to start preparing for all association’s annual revenue reporting. If the condominium is only fifty (50) units or less, or annual revenues are less than $100.000, then cash receipts would be automatic. The end-of-the-year statement, which is better known as the 12/31 (December, 31st.) would most likely already be prepared by the management company.
If the association annual revenues are $400.000 or more, then the State of Florida requires a full blown audit. Paying for a full audit year after year would be costly and may be inconsequential. By approval of a majority vote of members at a duly called members meeting (usually Annual Meeting), the State allows for a waiver of the stringent reporting requirements. Regardless of the number of units or revenues, every seven (7) to eight (8) years all associations should arrange for an audit from a certified public accountant. (CPA).
The State also requires the association to complete and send financial reporting to all members within a precise time frame. In lieu of sending the statements to all members, which is also a costly task, the State allows for a notice stating, “that a copy of the financial statement will be mailed without extra charge upon written request.” It is local custom to add this statement with the Annual or Budget notices.
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(13) FINANCIAL REPORTING.–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 by the association or received from the third party, but not later than 120 days after the end of the fiscal year or other date as provided in the bylaws, the association shall mail to each unit owner at the address last furnished to the association by the 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. The division shall adopt rules setting forth uniform accounting principles and standards to be used by all associations and shall adopt rules addressing financial reporting requirements for multicondominium associations. In adopting such rules, the division shall consider the number of members and annual revenues of an association. Financial reports shall be prepared as follows:
(a) An association that meets the criteria of this paragraph shall prepare or cause to be prepared a complete set of financial statements in accordance with generally accepted accounting principles. The financial statements shall be based upon the association’s total annual revenues, as follows:
1. An association with total annual revenues of $100,000 or more, but less than $200,000, shall prepare compiled financial statements.
2. An association with total annual revenues of at least $200,000, but less than $400,000, shall prepare reviewed financial statements.
3. An association with total annual revenues of $400,000 or more shall prepare audited financial statements.
(b)1. An association with total annual revenues of less than $100,000 shall prepare a report of cash receipts and expenditures.
2. An association which operates less than 50 units, regardless of the association’s annual revenues, shall prepare a report of cash receipts and expenditures in lieu of financial statements required by paragraph (a).
3. A report of cash receipts and disbursements must disclose the amount of receipts by accounts and receipt classifications and the amount of expenses by accounts and expense classifications, including, but not limited to, the following, as applicable: costs for security, professional and management fees and expenses, taxes, costs for recreation facilities, expenses for refuse collection and utility services, expenses for lawn care, costs for building maintenance and repair, insurance costs, administration and salary expenses, and reserves accumulated and expended for capital expenditures, deferred maintenance, and any other category for which the association maintains reserves.
(c) An association may prepare or cause to be prepared, without a meeting of or approval by the unit owners:
1. Compiled, reviewed, or audited financial statements, if the association is required to prepare a report of cash receipts and expenditures;
2. Reviewed or audited financial statements, if the association is required to prepare compiled financial statements; or
3. Audited financial statements if the association is required to prepare reviewed financial statements.
(d) If approved by a majority of the voting interests present at a properly called meeting of the association, an association may prepare or cause to be prepared:
1. A report of cash receipts and expenditures in lieu of a compiled, reviewed, or audited financial statement;
2. A report of cash receipts and expenditures or a compiled financial statement in lieu of a reviewed or audited financial statement; or
3. A report of cash receipts and expenditures, a compiled financial statement, or a reviewed financial statement in lieu of an audited financial statement.
Such meeting and approval must occur prior to the end of the fiscal year and is effective only for the fiscal year in which the vote is taken. With respect to an association to which the developer has not turned over control of the association, all unit owners, including the developer, may vote on issues related to the preparation of financial reports for the first 2 fiscal years of the association’s operation, beginning with the fiscal year in which the declaration is recorded. Thereafter, all unit owners except the developer may vote on such issues until control is turned over to the association by the developer.