Common Financial Questions from Condo Board Members
Q: What’s the difference between the operating fund and the reserve fund?
The operating fund covers regular recurring expenses — utilities, maintenance, management fees, insurance. The reserve fund is for major future repairs and replacements of common property. They must be recorded completely separately. This separation is a legal requirement in Saskatchewan and is the foundation of proper fund accounting.
Q: How do we know if our reserve fund is adequate?
A reserve fund study tells you. It assesses your building’s major components, estimates replacement costs and timelines, and tells you whether your current contributions will cover anticipated expenses. If you haven’t had a study done in the last 3–5 years, getting one should be a priority.
Q: A unit owner hasn’t paid condo fees in three months. What do we do?
Follow your corporation’s arrears policy consistently. This typically means a formal notice, late fees as allowed by your bylaws, and escalating to legal action if arrears continue. Letting it slide isn’t fair to owners who pay on time, and it’s a breach of the board’s fiduciary duty.
Q: Do we need a full audit every year?
Not necessarily. It depends on your bylaws and the size of your corporation. You may be required to have a review engagement or compilation instead. Check your bylaws and get advice from your accountant if you’re unsure.
Q: Can the board approve large expenditures without owner approval?
It depends on the amount and what your bylaws say. Most bylaws give the board authority up to a certain threshold. Above that, a special resolution of the owners may be required. Know your thresholds before committing to major contracts.
Q: What happens if we run a deficit?
A deficit means expenses exceeded revenue for the period. It needs a plan — either fees increase, expenses decrease, or both. Carrying ongoing deficits erodes the corporation’s financial position over time.
Q: How often should we report to owners?
At minimum, at the Annual General Meeting. Many well-run boards provide quarterly summaries — it builds trust and reduces questions at the AGM.
Q: Can a board member be personally liable for the corporation’s financial decisions?
Board members acting in good faith and within their authority are generally protected. However, boards that knowingly act outside their authority, fail to maintain insurance, or mismanage funds can face personal liability.
Q: What is fund accounting and why does it matter?
Fund accounting is a method of tracking money by purpose rather than just by account. For a condo corporation, it means your operating fund and reserve fund are tracked completely separately — each with its own budget, balances, and reporting. Most general accounting software doesn’t do this natively, which is why purpose-built software for condo corporations matters.
Disclaimer: For general informational purposes only. Not legal, financial, accounting, or tax advice.