How To Read And Understand Condo Financial Statements

In this article, the author provides guidance on how to read and understand condo financial statements. The financial statements are presented in two parts: the income statement and the balance sheet. The income statement shows expenses and contributions, while the balance sheet presents information about assets, liabilities, and equity. The author suggests two things to consider when assessing the financial health of a condominium corporation. Firstly, the balance in the general fund should not be negative. If it is, the board members should find a way to remedy the situation, such as increasing the contribution rate or imposing a special contribution to avoid recurring deficits. Secondly, the balance of the contingency fund must be analyzed to ensure it will be sufficient to finance major future work. Regular independent appraisals are recommended to forecast expenses for repair and maintenance of common areas. The board members should be attentive to the signals sent by the financial statements to ensure the financial health of the corporation.