By Attorney Avi S. Tryson
Q: What are the requirements for preparing financial reports for a condominium association? What type of report is required? Do we need to hire a CPA firm to prepare the financials, or can we prepare the reports ourselves?
G.D., Miami, FL
A: The annual financial report requirements for condominium associations are outlined in Section 718.111(13), Florida Statutes. The statute requires that within 90 days after the end of the fiscal year, or annually on a date if provided in the bylaws, the association shall prepare and complete, or contract for the preparation and completion of, a financial report for the preceding fiscal year. Further, the statute requires that within 21 days after the financial report is completed, and no later than 120 days from the end of the fiscal year, the association must mail or hand deliver to each unit owner a copy of the financial report or a notice that a copy of the financial report will be mailed or hand delivered to the unit owner, without charge, within 5 business days after receipt of a written request from the unit owner. With regard to the type of report required, that depends on the annual revenue of your condominium association. Pursuant to the statute, an association with total annual revenues of less than $150,000 shall prepare a report of cash receipts and expenditures. An association with total annual revenues between $150,000 and $300,000, shall prepare compiled financial statements. An association with total annual revenues between $300,000 and $500,000, shall prepare reviewed financial statements. An association with total annual revenues of $500,000 or more shall prepare audited financial statements. Pursuant to Rule 61B-22.006 of the Florida Administrative Code, reviewed financial reports and audited financial reports must be performed by an independent Certified Public Accountant. Reports of cash receipts and expenditures or compiled financial reports may be prepared by the association.
Q: I was recently elected as the treasurer of my condo association and discovered that the association is writing paper checks for all expenses, no matter how minor. Is it possible to get a debit card in the name of the association which we could use for minor expenses like office supplies?
M.F., Longwood, FL
A: In short, no. Section 718.111(15), Florida Statutes, specifically forbids associations, their officers, directors, employees, and agents from using a debit card issued in the name of the association, or billed directly to the association, for the payment of any association expense. Further, pursuant to the same statute, the use of a debit card issued in the name of the association, or billed directly to the association, for any expense that is not a lawful obligation of the association may be prosecuted as credit card fraud. This provision was added to Chapter 718, Florida Statutes in 2017 in order to prevent fraud, as unlike a credit card, when a debit card is used the funds are instantly withdrawn from the association’s account. This gives condominium associations’ boards of directors added protection to make sure that all purchases on behalf of the association are duly authorized. The statute does not apply to credit cards, so the association still has that option. Please also note that the prohibition of debit cards was only enacted with regard to condominium associations, and not to homeowners’ associations or cooperative associations.