Preparing for the Annual Audit of Your Condominium’s Financial Statements

Vicki Wilson, CPA, CA BLR, LLP

Preparing for the Annual

Audit ofYour Condominium’s Financial Statements

The Condominium Act of Ontario requires that all condominiums have an independent auditor perform an annual audit of their financial statements, with one exception: Condominiums with less than 25 units are exempt from this requirement if all of the owners consent in writing to waive the audit each year.

If an audit is required, the condominium corporation must appoint an auditor at the AGM. Once this has occurred, it is the condominium’s responsibility to compile the year-end package for the auditor. The auditor’s role is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, in addition to ensuring compliance with Canadian accounting standards for not-for-profit organizations (ASNPO). The Board of Directors is responsible for the preparation and fair presentation of the financial statements in accordance with ASNPO.

The auditor will require documentation for the full fiscal year and subsequent to year end, up to the date of the auditor’s report. This report will note any significant items that the auditor feels are necessary to bring to the attention of the users of the financial statements. The auditor’s report is dated when the Board of Directors provides written approval to the auditor and therefore, part of the audit requires a review of documentation subsequent to year end. Be prepared to tell your auditor when you require draft financial statements and provide the required infor

Here is a list of items that can help you prepare for the annual audit: • Board of Directors meeting minutes from the current year, including the AGM minutes and up to the date of the audit report • Budget for the fiscal year • Most recent reserve fund study – Notice of Future Funding • Most recent status certificate • Support for the condominium fees for the current year (e.g. letter to unit owners) • Trial balance, balance sheet, income statement, and general ledger for the fiscal year • Bank statements and reconciliations, all cancelled cheques and deposit books for the full fiscal year and subsequent to year end for all of the condominium’s bank accounts (operating and reserve) • Investment statements for the fiscal year, in addition to details on any purchases or sales during the year • Accounts receivable listing at year end, which should be reconciled to the general ledger • Details of any units with liens on them at year end • Prepaid expenses as at year end, which represents items paid for in the current fiscal, but which relate to an expense of a future year (e.g. insurance, utility deposits) • Accounts payable listing at year end which should be reconciled to the general ledger, segregating operating and reserve fund payables • Accrued liabilities listing, and support for those items • Agreements for loans, mortgages, notes payable, or other long-term liabilities, including contracts for services (e.g. property management, property maintenance, cable, etc.) that have been entered into during the year and subsequent to year end • Supporting documents for transactions (e.g. invoices) during the year and subsequent to year end

In addition to the above, the auditor is required to understand controls in place at the condominium, so they will inquire with the Board/management about the processes, security, fraud, outstanding legal matters, etc.

Once the auditor has completed the audit of your condominium, they will pro

vide draft financial statements to the Board of Directors for review and approval. In addition to this, there will be further inquiry with the Board about items that have occurred subsequent to year end that could impact the audited financial statements. As soon as the above is addressed, the auditor will release the final version of the audited financial statements, and you’re relieved until the next year’s audit commences.

Vicki Wilson, CPA, CA is a partner at BLR, LLP. Vicki enjoys all aspects of her work as a licensed practitioner and has over 13 years of audit experience with not-forprofit organizations.