Thanks to House Bill 6027 that was approved by the Florida Legislature in 2017, the members of condominium, cooperative and homeowners associations can now waive the preparation of costly financial auditing reporting each fiscal year and instead opt for simple reports of cash receipts and expenditures.
In the past, condominium associations could only waive for three (3) fiscal years in a row and then would have to have audited type reports prepared in the 4th year. This requirement of not being able to waive in the 4th year has been removed. There was also an exemption for associations under 50 units from having to prepare audited type reports that was removed. So now, all community associations are subject to similar regulations when it comes to year-end financial reporting.
For associations with total annual revenues of less than $150,000, only a simple report of cash receipts and expenditures has to be prepared and such a report can be prepared by a bookkeeper.
For associations with total annual revenues of $150,000 or more, but less than $300,000, a compiled financial statement prepared by a CPA is required. However, the members can vote by a majority of the owners present at a properly called meeting to waive a compilation and instead have a simple report of cash receipts and expenditures.
For associations with total annual revenues of at least $300,000 but less than $500,000, a reviewed financial statement prepared by a CPA is required. However, the members can vote by a majority of the owners present at a properly called meeting waive a review and instead have a compiled financial statement or simple report of cash receipts and expenditures prepared.
For associations with total annual revenues of $500,000 or more, a reviewed financial statement prepared by a CPA is required. However, the members can vote by a majority of the owners present at a properly called meeting to waive an audit and instead have a reviewed financial statement, complied financial statement or a simple report of case receipts and expenditures prepared.
A board of directors can always decide in a particular fiscal year to not put up a waiver vote to the members and have the requisite review, compilation or audit prepared or even a greater auditing report prepared if the board believes it would be beneficial to have a CPA review the books.
Many times boards will opt for the CPA review of the books, whether it be a compilation, review or audit, if it has been many years since the last CPA review, there has been an overhaul change to the members of the board, or a change in management. This is to make sure association expenditures have been, and will continue to be, on the up and up.
When there has been no evidence or indication of any problems with the association’s finances, many boards will decide to ask the members to waive the CPA’s reviews to save the association some money as the CPA reports get more costly the higher the level of reporting is chosen; with the cost increasing from a compilation to a review to an audit.
Association boards need to decide each fiscal year whether they want to go for a membership vote to waive the CPA reporting requirements. If a waiver vote of the members is to be taken, the vote is usually taken by proxy at the annual meeting of the members (usually in the first quarter of the year- January to March) and if not by the annual meeting should be taken before the end of the fiscal year.