How to Read the Association’s Financial Report

How to Read the Association’s Financial Report

A financial report includes information that association board members use to plan the community’s annual budget and direct its financial operations. When you review the financial report, you understand how your money—and your neighbors’—is being used.

Start with the summary. It explains what your Association earned, what was spent and what remains available in reserves. Then read essential financial data. The financial report should be separated into the following parts:

  • The balance sheet includes the association’s assets (income and reserves) and liabilities (what is owed) at a specific point in time.
  • The income statement indicates what money the association can expect from regular and special assessments and other sources like clubhouse rental or interest from investments.
  • The statement of cash flow is a summary of anticipated income and expected expenses than may include utilities, maintenance contract payments—landscaping, pool, trash pickup, elevators—as well as insurance costs, payroll and taxes.
  • Review marketing information. Prospective buyers often ask to see an association’s financial statements, so basic marketing data about the community may be included in the report. This information can be valuable in marketing your own home if you decide to sell.

 

Lieberman is a leading Chicago Property Management Company, serving condo, HOA and co-op communities.