What Every Council Member Should Know About Financial Reports
Managing and overseeing an association’s finances is one of the council's most important responsibilities. To successfully fulfill this duty and sustain the financial well-being of your strata, you must understand financial reports and their importance to the success of your association. Read on to learn everything you need to know about financial reports.
What’s a financial report?
A strata's financial report consists of the key economic information that'll help council members manage operations and make good decisions. The following are included in a financial report:
- Balance sheet
- Statement of income and expense
- General ledger
- Cash disbursements ledger
- Accounts payable report
- Account delinquency report
- Bank reconciliation
Who prepares the financial report?
In most cases, the strata manager will prepare the financial report and provide additional relevant documents for the council to review. The manager will send these reports to council members at least five days before the board meeting where they're finalized.
How often do we receive a financial report?
Financial reports are prepared monthly, typically in the middle of the following month after all balances post. It’s very important to monitor financials consistently on a monthly basis, as they indicate the financial health of a strata corporation and inform ongoing decision making.
What should I look for in the financial report?
Because strata corporations are nonprofits, the income and balance sheet must balance to zero—it can’t be negative or positive. The following are things you should also look for to ensure your strata corporation is in good financial standing:
- There isn’t a decrease in the amount of cash on hand.
- There aren’t variances between expenses vs. budgeted items.
- Vendors are getting paid the agreed-upon amount.
- There are sufficient funds in your reserves for any capital improvement projects.
- There isn’t an increase in owed bills or assessments.
Who can access the report?
Due to the sensitive and personal data that can be included in the report, management companies will typically provide two different financial reports—one for council members and one for homeowners. The council member report will include all financial information, and then members will work together to determine what’s appropriate for all homeowners to see before sharing.
Where should these reports be stored?
Both your strata corporation and management company should securely store these reports indefinitely; however, requirements vary by province. Many stratas store these documents both in print and digitally, using an app like TownSq.
While financial reports can be long and dense, it’s important they’re thoroughly reviewed on a monthly basis. Doing this will ensure you’re fulfilling your fiduciary duty, protecting your strata corporation, and it'll help prepare your community for a strong future.