- Financial statements : Financial statements
Definition : Financial statements
The complete set of financial reports, prepared at the end of each financial exercise, which shows the financial and accounting situation of the co-ownership. They include a balance sheet, the income statement for the preceding financial period, the statement of debts and claims. There are three types of accounting engagements to which the financial statements of a syndicate may be subjected, being an audit, a review, or a compilation (notice to reader). These documents are part of the register of co-ownership and shall be made available to any co-owner upon request.
November 1st 2016 - A condominium syndicate has the obligation to report its operations using the fund basis of accounting. The article 1071 of the Civil Code of Quebec imposes indeed the creation of a contingency fund. Every condominium has to set up accounts distinguishing the general fund for common operations, sometimes called the administration funds, and the contingency funds.
Your condo does not necessarily need a Chartered Professional Accountant to present its financial information, whether it is the financial statements, financial forecasts or funding requests. Competent administrators or contractors supervised by the directors could do the job and present the required financial information.
The need however could however be felt if the owners have doubts about the work done, the skills or the honesty of the current administration. Internal reporting to co-owners may also be absent or deficient. It is also possible that the general by-laws require the production of certified financial statements.
January 27th, 2016. Among the various obligations imposed upon each and every Syndicate of co-ownership, there is a particular one worthy of note. It is the obligation to keep the list of the Syndicate’s co-owners and the books and registers necessary for the proper functioning of the Syndicate. This is easily understandable, since the Syndicate, as a moral person distinct from its members, has its own “corporate life” which must be properly documented. The Code also tells us that these documents are the Syndicate’s property and that the co-owners have access to them (Article 342 of the Quebec Civil Code).
Preparing a budget forecast is an unavoidable task in co ownership. Its preparation, preliminary examination and adoption will ensure the proper functioning of the syndicate of co-owners. It is up to the Board of Directors to define its terms, in view of the expenses that will have to be paid to allow a syndicate to meet its obligations. The budget also makes it possible to fix the amount of the contributions of each co-owner to the expenses of the co-ownership.
It will be prepared by the Board of Directors or property manager, based on the amounts spent in preceding financial periods, as well as anticipated non-recurring expenses. The preparation of the budget forecast requires time and rigor.
To avoid financial problems, it is important to verify, before your purchase, that the co-ownership has implemented sound management practices and controls of its expenses. To do so, you should ask questions to your vendor to find out if the syndicate keeps adequate financial records.
Question: We would like to know if the law requires having our syndicate’s financial statements audited by an accountant.
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The law provides that a syndicate must keep a register at the disposal of the co-owners. In most cases the declarations of co-ownership list the items it contains. This register is the memory of the syndicate, and consequently, its archives. In is thus invaluable. Much more than a mere witness of the sound management of an immovable, it is its prime instrument. Therefore, preservation and access are the hallmarks of this register.