If you want to find out about the history of a town, region or country, head to a museum or look it up on the Internet. If you want to find out about your family’s history, look at your photo album, whether it’s in a book or online. And if you want to find out your medical history, good luck!
But if you want to find out about past financial records of a condo or co-op development, that history is comprised of all sorts of documents, financial records, minutes of meetings, election results, invoices, and other records that are kept from year to year. How are these records kept, and what are the most important pieces of the “historical record” for board members and managers? The answers are complicated, but fortunately, we have several financial professionals that have agreed to help us out.
What You Should Know
To begin with, what is the minimum financial information that board members should know and understand about their buildings? While boards need a financial professional in their corner, that doesn’t mean that there’s not some basic information that they should know and understand on their own. Obviously, the accountant or other expert can’t be there all the time!
Professionals interviewed by The Chicagoland Cooperator mentioned quite a few important items as essential. These include shareholder or unit-owner arrears, cash balances, unusual items such as special repairs or overtime, long-term unpaid invoices, reserve activity and balances, profit-and-loss statements (also called income statements), accounts payable, accounts receivable, subsidiary ledgers, bank reconciliations, check registers, general journals, open liabilities, expense and income vs. the budget, and major capital projects coming up.
Many of these items are contained in a monthly report provided by the property manager, which is reviewed by the treasurer or other board members each month. “We always try to tell board members, if this was your business, would you say 'Hey, I don't need to know about my business, I hired someone else to take care of my accounting?' Of course you wouldn't, you'd want to be involved, you have a huge investment in that business, and it's the same thing in an association. This is a huge investment you have, you have to be active, and you have to know what's going on,” says Steven Silberman, vice president and CPA at the certified public accounting firm of Frost, Ruttenberg & Rothblatt, PC, in Deerfield and Chicago.