A.H. from Pennsylvania writes:
Dear Mister Condo,
I belong to a Condominium complex in Pennsylvania (approx. 426 units) and according to the By-Laws we are to receive copies of the audited financial statements – which are useless because the auditor cites in the report that the Board basically has decided to release selective information in the report. They refuse to offer a line-by-line copy of the operating budget because unit owners would then know exactly what the salaries of the staff are…I am paying their salaries. Why can’t I know the amount? There are two dozen items with fairly substantial amounts, but no breakdown. We were advised they don’t even give the Council a breakdown, they just sign checks based on invoices! I’m concerned something is going on, but searching online hasn’t yielded any clear results in terms of what is/is not acceptable financial reporting (we are not FHA approved) and what the condo does or does not have to disclose to owners. We are just becoming concerned that our exorbitant HOA fees are going to fund a very lavish retirement for office staff….
Mister Condo replies:
A.H., generally speaking, the standards for financial reporting are left up to the Board and the preparer of the condominium association’s auditor or statement preparer. After all, the auditor/preparer is hired by the Board and reports only to them. Additionally, some property management firms include basic financial statement preparation in their management fees and provide the service as part of their management contract with the association. Unless your governance documents specifically state the level of detail to be provided in these statements, you are largely at the mercy of the preparer to provide accurate and easily to understand financial statements and audits. That does not mean you are powerless to see how and where the association’s money is being spent but you may have to do some extra footwork to get the information you seek.
As a member of the association, you are able to inspect any and all records of the association. You may need an appointment to do so and you may be charged a fee for inspection of such records but you do have a right to see just about whatever you want. Further, you are free to petition the Board to update their reporting methods or answer any specific questions you have although the Board is not required to answer your request. If you and other unit owners are still concerned that there is a mismanagement of association funds, the ultimate solution is to seek a seat on the Board where you can see what’s happening first-hand. Board members are democratically elected volunteers from within the community that are charged with protecting the association’s assets, which includes keeping an eye on how association funds are spent. If they aren’t doing that job, it is time for some new Board members. Good luck!