How to Read a Condo Corp Financial Statement
Introduction
Section titled “Introduction”Financial statements don’t have to be intimidating. As a board member, you don’t need to understand every line — but you do need to know what to look for and what questions to ask.
The Balance Sheet
Section titled “The Balance Sheet”A balance sheet is a snapshot of your corporation’s financial position on a specific date.
- Assets: Cash, reserve fund accounts, investments, uncollected condo fees
- Liabilities: Accounts payable, prepaid fees from owners, loans
- Net assets: The difference between assets and liabilities
Watch for: are the operating fund and reserve fund shown separately? If lumped together, your accounting system may not be doing proper fund accounting.
The Statement of Operations (Income Statement)
Section titled “The Statement of Operations (Income Statement)”This shows revenue and expenses over a period of time. Key questions to ask:
- Are we over or under budget in any major category?
- Did we run a surplus or deficit this period, and why?
- Are reserve fund contributions being made as planned?
The Cash Flow Statement
Section titled “The Cash Flow Statement”This shows where money actually came from and where it went. Watch for: Is the reserve fund receiving its planned monthly contributions? Are there large unexpected outflows?
What Good Financial Statements Look Like
Section titled “What Good Financial Statements Look Like”Good financial statements are clear, consistent, and easy to follow. They separate operating and reserve fund activity, compare actual results to budget, and are presented at every board meeting.
Disclaimer: For general informational purposes only. Not legal, financial, accounting, or tax advice.