A new condo tower
As these financial statements show, this new condominium tower got off to a very bad start.

Statement of Financial Position
Assets
Common element fees receivable    $48,533.76
This often means that there are $48,533.76 in unpaid condo fees. Check this figure against the figures from previous years to see if this problem is growing.

Ask the treasurer and the president what the board is doing to recover these unpaid condo fees. This is no joke. I have seen a condo that wrote $40,000 a year off the books as un-collectible debts.
Question: Ask the auditor if all the receivables are unpaid condo fees.

Interfund Balance   ($125,000)
This is a negative figure because it means that the board transferred $125,000 out of the Reserve Funds and used it to pay operating costs.

This money, in theory anyway, must be returned—with interest—to the Reserves. In practice, this never happens and in the future the owners will face a special assessment or a huge increase in fees.

These two figures tells the owners that the corporation is not bringing in enough money to pay its bills. The $48,533.76 that are in arrears is dragging the condo down.

These figures show that the corporation is running an large operating deficit.

General operations
Revenue
Interest
If the budget calls for a few hundred dollars in interest and there is none, then the operating funds are next to zero.

Expenses
Utilities    $587,643
Question: Ask the auditor if the utility expenses include payments for late payments and penalties for not paying the bills on time or extra costs for running an unpaid balance.

If the auditor won't or can't answer the question, ask president and the treasurer if the utility expenses include payments for late payments and penalties for not paying the bills on time or extra costs for running an unpaid balance.

A single figure for electricity ($290,924) is not broken down for you into the cost for the power plus service charges and any charges for late payments and missed discounts for paying the bill on time.

If no one can/will answer this question, then I would vote against renewing the auditor's contract and I would state, at the owners meeting, that you have lost confidence in the board's competence.

After the owners meeting, submit a written request to the manager to examine the previous year's monthly utility bills.

Balance, end of year  ($219, 067)
This means that there is a large operating deficit. Check it against the previous years to see if this deficit is growing or getting smaller.

Reserve Operations and Fund Balance
Balance, beginning of the year    $178,000
Balance, end of the year              $286,540

This was complete bullshit. These figures is what the board said the condo had in the reserve fund but those numbers existed only on paper.

On the front page of the auditor's report, the auditor added in a qualification. He stated that there was only $96,534 in the reserve fund which is less than the $286,540 that the Reserve Fund Study said was required.

The true Reserve Fund balance may (or may not) be seen in the Status Certificates. When someone new moves in, ask if you can take a look at their Status Certificate. The number shown there should be correct for the date specified. (Watch for old dates such as: "At the end of the 1st Qtr" or "At the end of the last fiscal year". That may have been months ago.

The audited financial reports for many troubled condo corporations may have a similar look and feel as this one.


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