Follow the Money Proper Financial Recordkeeping

 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 South Florida 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. “As the duties of the board require monitoring of cash balances, cash flows, and  the approval/timing of major repair and replacements, a qualified board should  have a good understanding of how to read their financial statements,” says Chip Swinarski, CPA at Swinarski & Company in Lake Worth. “A qualified board should be skilled at budgeting, and have a cognizance for  reviewing variance reports to identify problems, trends and other financial  indicators.”  


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