Association’s financial statements are produced for two primary reasons:
- To enable the Community Association’s board and manager to control the Association’s financial operations.
- To provide their internal and external users with the financial information needed to make appropriate decisions on behalf of the community association.
Association’s financial statement requirements are governed by state statue. Florida Law Financial Statements and Reporting Requirements are:
- Associations less than 50 units and/or less than $150,000 in annual revenues are required to prepare a Statement of Cash Receipts and Disbursements for the fiscal year.
Although this statement is not required to be prepared by a licensed CPA the board may want an outside CPA to prepare the Statement of Cash Receipts and Disbursements as well as perform agreed upon procedures on the figures. The CPA will provide your financial data in the appropriate format and free from obvious material arithmetical and clerical errors.
- Associations with more than 50 units and annual revenues between $150,000 and $300,000 in annual revenues are required to prepare a Compilation of Financial Statement for the fiscal year.
The Compilation of Financial Statement is an engagement where the CPA applies their financial reporting expertise to assist you in the presentation of financial statements. At the completion of the engagement the accountant will issue a report which cannot be relied upon to identify or disclose any financial statement misstatements, including those caused by fraud, error or to indentify or disclose any wrongdoing within the entity or noncompliance with laws and regulations.
- Associations with more than 50 units and revenues between $300,000 and $500,000 in annual revenues are required to prepare a Review of Financial Statement for the fiscal year.
The Review of Financial Statement is a mid-level assessment where the CPA applies financial reporting expertise along with providing limited assurance on the financial statements. A review is less thorough than an audit, thus a less costly analysis of an association’s financial activities. It provides the board with some assurance that the financial statements are consistent with typical trends without the detailed examination obtained in an audit. In a Review of Financial Statement, the CPA interviews management personnel and others involved in the association’s accounting process in order to assess the association’s financial procedures. The reviewer compares the actual amounts with the association’s prior year line items and looks for trends or irregularities.
- Associations with more than 50 units and revenues more than $500,000 in annual revenues are required to prepare an Audit of Financial Statements for the fiscal year.
The Audit of Financial Statements is an examination, on a test basis, in accordance with generally accepted auditing standards, providing reasonable assurance that the financial statements are free of material misstatements.