How Much Auditing of the Condo’s Finances is Required?

G.S. from Fairfield County writes:

Dear Mister Condo,

Our Condo Declaration states that the Association’s annual financial statement shall be audited by an independent certified public accountant. Our board claims it has the discretion to choose the “level” of audit, and that an accountant’s review of the financial statement is adequate to meet our Declaration’s audit requirement. Does this make sense? Many thanks.

Mister Condo replies:

G.S., interpretation of your association’s Declaration is usually the work of the association’s attorney. Ideally, you will get a legal opinion on whether or not the level of audit conducted by the association’s accountant is adequate. That being said, as long as an audit is being conducted annually and no red flags are arising from that audit, it is very likely that the level of audit satisfies the requirement as outlined in the Declaration. Of course, many associations conduct far more thorough audits on intervals longer than one year. I know of some that perform more detailed audits every other year; some every third or fifth year. The Board is empowered to make business decisions such as this. My advice to you is to petition them, in writing, to suggest that a more thorough audit be conducted on every other, every third, or every fifth year and see if they do not agree with that approach. All the best!