Q. Our condo association recently had a budget meeting, and there were many accusations from the members regarding improper preparation of the budget and transparency in the process. Some members demanded more reports and updates on the association’s finances. Others were demanding an audit. What is my association required to do with respect to financial reports and audits?
A. These arguments are common, as many residents feel they should have a say in the association’s budget. In reality, however, the preparation of the budget is squarely a decision for the Board members who were elected by the residents to forecast the association’s expenses and prepare a budget. That being said, the homeowners are entitled to an annual financial report, and in some cases, an audit of the association’s spending.
The level of financial reporting is governed by the association’s total annual revenues. For associations with $400,000 (or more) in annual revenues Florida law does require audited financial statements on an annual basis. The association can opt for a lower standard of financial reporting but only with a majority of the voting interests at a duly called meeting of the membership. This vote must take place before the end of the association’s fiscal year and is effective only for that year. The membership cannot waive the association’s required financial reporting for more than three (3) consecutive years.