Condo Assurance Requirements

When Do Condominiums in Saskatchewan Require an Audit or Review, and How to Avoid It

Preamble

This document provides an overview of the audit and review requirements for condominium corporations in Saskatchewan as stipulated by The Condominium Property Act, 1993. It outlines the conditions under which audits or reviews are necessary, the steps to avoid these requirements, and the benefits and reasons for conducting or waiving audits and reviews. This information is intended to help condominium corporations manage their financial obligations effectively and make informed decisions regarding their financial reporting practices.

Requirements for Audits and Reviews

According to The Condominium Property Act, 1993, and the associated regulations, the audit and review requirements vary based on the number of units in the condominium corporation:

1. Corporations with Fewer than 12 Units:

   • Audit: Not required.

   • Review: Required annually unless 80% of unit owners provide written consent to waive this requirement【17:0†source】.

2. Corporations with 12 to 50 Units:

   • Audit: Required annually unless 80% of unit owners provide written consent to waive this requirement.

   • Review: If an audit is waived, a review is required annually unless 100% of unit owners provide written consent to waive this requirement【17:0†source】.

3. Corporations with More than 50 Units:

   • Audit: Required annually with no option to waive【17:0†source】.

Steps to Avoid Audits or Reviews

For condominium corporations that qualify to avoid an audit or review, the following steps should be taken:

1. Obtain Written Consents:

   • For Corporations with Fewer than 12 Units:

     • Obtain written consent from at least 80% of unit owners to waive the annual review.

   • For Corporations with 12 to 50 Units:

     • Obtain written consent from at least 80% of unit owners to waive the annual audit.

     • If an audit is waived, obtain written consent from 100% of unit owners to waive the annual review【17:0†source】.

2. Annual Renewal of Consents:

   • Ensure that consents are renewed annually as required by the regulations【17:0†source】.

3. Notify Non-Consenting Owners:

   • Serve notice to any unit owners who did not provide consent, informing them that the financial statements will not be audited or reviewed. Include a description of their right to apply to the court for an order requiring the financial statements to be audited or reviewed【17:0†source】.

4. Court Applications:

   • Be aware that any owner can apply to the court within 30 days of receiving the notice to have the financial statements audited or reviewed. The court may then decide whether to require an audit or review based on fairness and equity【17:0†source】.

Reasons a Condominium Might Want to Have an Audit or Review

1. Transparency and Accountability:

   • Objective: Ensure transparency in financial matters, which helps in building trust among unit owners.

   • Benefit: Demonstrates accountability of the board and property management.

2. Financial Accuracy:

   • Objective: Confirm the accuracy of financial statements.

   • Benefit: Identifies errors or discrepancies in financial records, providing an accurate picture of the corporation’s financial health.

3. Regulatory Compliance:

   • Objective: Comply with legal requirements set by The Condominium Property Act, 1993.

   • Benefit: Avoids legal issues and potential penalties by adhering to provincial regulations.

4. Risk Management:

   • Objective: Detect and mitigate financial risks or fraudulent activities.

   • Benefit: Protects the corporation’s assets and ensures proper use of funds.

5. Lender Requirements:

   • Objective: Satisfy the requirements of lenders or potential buyers.

   • Benefit: Facilitates mortgage approvals and enhances the marketability of units.

6. Enhanced Decision-Making:

   • Objective: Provide a basis for informed decision-making by the board.

   • Benefit: Supports better financial planning and management.

Reasons to Waive an Audit or Review

1. Cost Savings:

   • Objective: Reduce operating expenses.

   • Benefit: Frees up funds for other essential services or improvements.

2. Simplified Administration:

   • Objective: Decrease administrative burden.

   • Benefit: Simplifies financial management for smaller corporations with limited transactions.

3. Sufficient Internal Controls:

   • Objective: Rely on existing robust internal controls and procedures.

   • Benefit: If internal controls are deemed adequate, an external audit or review may be unnecessary.

4. Consensus Among Owners:

   • Objective: Achieve a high level of trust and consensus among unit owners.

   • Benefit: With mutual agreement, owners may feel an audit or review is redundant.

5. Previous Clean Reports:

   • Objective: Base the decision on consistently clean audit or review reports from previous years.

   • Benefit: Demonstrates a history of sound financial management, reducing the perceived need for ongoing audits or reviews.

6. Small Size and Simple Finances:

   • Objective: Consider the simplicity of the corporation’s financial transactions.

   • Benefit: Smaller corporations with straightforward financial activities may find audits or reviews less critical.

Conclusion

By understanding and following the guidelines set forth in The Condominium Property Act, 1993, and its regulations, condominium corporations in Saskatchewan can manage their audit and review obligations effectively. Smaller corporations can avoid these requirements by obtaining the necessary consents from unit owners, ensuring streamlined financial operations while complying with legal mandates. This information is provided as is and we do not take liability for decisions made by corporations.

References

• The Condominium Property Act, 1993

• Condominium Property Regulations, 2001【17:0†source】【17:1†source】【17:2†source】