Aline Désormeaux

Aline Desormeaux (CPA, CA, Adm.) holds a Bachelor of Business Administration from UQAM and is a member of the Order of Chartered Professional Accountants of Quebec and of the Order of Chartered Administrators of Quebec.

Chartered Professional Accountant since 1992, she specializes in audit, review engagement and notice to the reader, and more particularly as an auditor for several condominium syndicates in Montreal, Nun’s Island, Laval and Mont-Tremblant. She also offers tax planning for corporation, individuals and estate, and financial forecasts services.

The statement of financial position of the condominium

The statement of financial position, also known as the balance sheet, lists the assets, liabilities and net assets of the co-ownership syndicate at a specific time. It is a picture of the financial situation at a given date compared to other statements that usually cover a full fiscal year.

The statement of financial position shows assets on one hand and liabilities and net assets on the other. Assets are always equal to liabilities plus net assets. Everyone knows the famous quote "nothing is lost, nothing is created, everything is transformed". This principle is reflected in accounting. The statement of financial position is always balanced since the asset is financed either by the creditors (liabilities) or by the co-owners (the net assets).

In co-ownership, it is necessary to use the fund basis of accounting, the Civil code of Quebec requiring at least the operating fund, the self-insurance fund and the contingency fund. Each fund is independent of the other and has its own statement of financial position that needs to be balanced.


Assets are resources or goods that will be used or consumed in future years. Bank balances, accounts receivable, prepaid expenses, inventory, fixed assets and investments are assets.

Assets are separated between the short and the long term depending on their ease of becoming cash. The most liquid assets are cash and short-term investments and are the first to be reported as current assets. Subsequently, the most liquid assets are usually accounts receivable. Short-term accounts receivable are expected to be cashed in the next fiscal year. If an account receivable has an encashment date of more than one year, it will be presented as long term.

The subsequent short-term assets is usually the prepaid expenses. These assets will be transferred to expense over time or with usage. Insurance, property taxes, maintenance contracts, inventory of supplies (keys or remotes) are usually paid for before they are consumed. Thus, the portion to be consumed in the next fiscal year will be a prepaid expenses for the syndicate. If the insurance is paid for the next 6 months, it is a resource (an asset) that you will not have to pay next year.

After short-term assets, there are the long-term assets. These assets have an economic value that will last for more than one year. In this category we find fixed assets and long-term investments. Fixed assets included in the assets of a condominium syndicate are those that are not part of the common portions. It's the fixed assets that are part of its patrimony. For example, the superintendent's apartment purchased by the syndicate, the tractor for lawn mowing, office equipment, computer equipment. These assets with a term of more than one year are presented as long-term assets and transferred to expense according to their useful life which must not exceed 40 years. If the computer paid $ 3000 has a useful life of 3 years, an amount of $ 1,000 per year will be reduced from the assets and expensed in the income statement to depreciation.

Long-term investments are those with a maturity of more than one year. However, we must not forget that the Civil code of Québec requires that the investments of the contingency fund must be liquid. Long-term investments should always be redeemable at any time.


The liabilities represent the syndicate's debts. Debts are also presented as short and long term on the statement of financial position, depending on their expected maturity. The usual short-term debts of a condominium syndicate are line of credit, accounts payable, wages and vacation payable and the short-term portion of long-term debt (portion of the debt to be repay in the next fiscal year). Long-term debts mature in more than one year.

When assets and liabilities are established, the subtraction of the liabilities from the assets indicates the net worth of the syndicate. There is a cumulative surplus if assets exceed liabilities and a deficit if liabilities exceed assets.

The limits of the statement of financial position

a) Some of the assets are recorded at cost and others at amortized cost. For example, if the syndicate bought an apartment for the superintendent, it is recorded at cost. The cost being often, after a few years only, well below the fair value of the good.

b) The preparation of the balance sheet requires accounting estimates. For example, estimating a bad debt and estimating the life of its fixed assets. If there are any debts (a lawsuit pending), it must be estimated whether or not it is likely that the syndicate will have an amount to pay, in which case it is necessary to recognize a liability without waiting for the final judgment.

c) Finally, financial commitments are not recognized. If you have signed a contract that has not yet been completed, you have nothing to report in the statement of financial position.

Despite these shortcomings that may present a financial position that is different from the actual situation, the statement of financial position is a very important financial statement. It serves to:

a) Measure the debt ratio of the co-ownership (debts / total assets). The higher the ratio, the more creditors are important and the more vulnerable you are, because your resources are already committed to debt repayment in the following years and / or if you have interest bearing debt, you are vulnerable to rising interest rates.

b) Establish your net assets by fund. Do you have accumulated surpluses or deficits for each of your funds? If the surpluses are large, you have some leeway to carry out future projects. On the other hand, if you have a deficit, you have to bail out the fund. A special contribution could be required.

c) Is the contingency fund well provided? If the contingency fund indicates a surplus but the money is lent to the operating fund, action must be taken as soon as possible to restore the situation.

These are just examples of how the statement of financial position contains a lot of information, just be attentive and know how to interpret the information while knowing the limits.


Aline Desormeaux, CPA auditrice, CA

Désormeaux Patenaude inc
1312 Sherbrooke est
Montréal, Québec H2L 1M2
Téléphone : 514 522-2232 EXT. 207
[email protected]

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