6 Annual Financial Reports Your Condo or HOA Needs To Keep

Posted by Andrea Drennen, CMCA on January 18, 2019

End of Year - More than Just Taxes

The Annual General Meeting is the time most communities begin to worry about yearly reports, but the fiscal (or financial) year end is equally important for proper record keeping for your community organization.

Most equate the end of the year with tax season, and that is true. But while you're working on getting information together for taxes, and closing the books on the prior year, it's also the perfect opportunity to run annual reports for your Condo or Homeowners Association.

The Importance of EOFY Reporting

Monthly reporting is not enough. If you're generating monthly financials for the board of directors each month, you are meeting the minimum requirements for financial reports. But that doesn't provide the full picture. Annual reporting gives your trustees access to the full breadth of how the community performed financially throughout the year, and helps insure that the community stays on track with reserves and operating expenses in the coming months. Think of this as a mid-way check and balance system, so there are no surprises when you get to the AGM.

As an addition to monthly financials, annual financial reporting helps you to identify trends in your spending, to provide insight into budget activity, and to raise any red flags that you might not otherwise notice right away (such as sudden increases or decreases in various areas). They will also greatly assist in future audits of your community's books.

EOFY Reports From Your Management Software

Prior to printing end of year reports, make sure you have entered in all of the transactions for the prior year, any transactional errors have been corrected, and you have reconciled your accounts.

If your community zeroes out the operating account at the end of each year, be sure that the transfer of operating excess to your reserve fund accounts has also been completed.

Balance Sheet

The Balance Sheet gives you an overview of the association's current financials as of the date it's run. Running this report on an annual basis will give you a snapshot of the community's financial position for the year.

TOPS [ONE] Users: The Balance Sheet Report as of 12/31/xxxx can be generated and automatically exported to Excel or PDF to add to your annual report package.

Profit & Loss Report (Budget vs Actuals)

The Annual Income & Expense Report (also Statement of Revenue and Expenses) provides a full accounting of the actual monies into and out of the association's ledger for the year, compared to the amounts defined in the budget. This is a key budgeting tool, so your board should be comfortable reading it, and it gives a great insight into what came in and what went out for the year (and how well you planned for it).

It's a good idea to export this report into spreadsheet format before closing the year. This gives you the ability to have actuals you can easily drop into your multi-year budget trends worksheet when it comes time to do new budgets. Be sure you do this before you close the year in your software, as most products won't allow you to export it once the year has been closed.

TOPS [ONE] Users: Print the Detailed Income Statement By Range Report for the full year (1/1/xxxx - 12/31/xxxx). This report will also summarize the accounts into ranges to give 'big picture' insights.

Reserve Statement

The Reserve Statement should show a breakdown of your reserve funds, how much was allocated to each fund, and how much was distributed from each fund. This report provides a snapshot of the flow of your reserve funds, and when combined with your updated reserve study and annual investment reports, should give the board a good understanding of how well funded the community's reserves are.

TOPS [ONE] Users: Since TOPS [ONE] allows for tracking of an unlimited reserve funds, breaking out reporting by your reserve study is easy. The Reserve Statement Report as of 12/31/xxxx can be generated and automatically exported to Excel or PDF to add to your annual report package.

Other Reports

In addition to reports you print from your community association management software, some outside sources have valuable information you should be gathering too.

Investment Reports

Particularly important are annual reports on the status of investments the community has made throughout the year - CDs, MMAs, Stocks or Bonds. Not only will you need these for tax purposes, but you'll also need them when it's time for your next audit. Comparing these to your Reserve Statement to make sure that your accounting records are accurate and to identify any red flags.

Bank Statement

If your bank offers an annual roll up statement of all transactions throughout the year, now is a good time to add that to your annual financial package. Often, you can get an electronic copy of this via your online banking portal.

Summary of Annual Contracts

Your community probably has dozens of contracts on a revolving door. If you aren't paying attention, contracts can auto-renew without giving you an opportunity to renegotiate the terms. That's why keeping your list of contracts and renewal information current is so important, and year-end is a great time to do that, as you are working on vendor tax info already.

Keep These Close

When you are compiling your annual report package, group your reports with the minutes from your last AGM as well as a copy of your most recent Audit/Review findings. This complete package makes it easy to hand over everything needed to your CPA for the next financial review, your IRS auditor (just in case), or the board if they want to review the year, It will also come in handy at your next budget meeting, and in getting ready for your next AGM.

And you can keep it all online! There's no need to waste a ream of paper when all of your reports can be stored in the online Document Management tool in TOPS [ONE]. You can then elect to share them with board members, committee members, auditors or even homeowners in just a couple of clicks. Find out more about Document Management in TOPS [ONE] below...

Document Management - More Info