Article
Courtesy of LEXOLOGY
By
Monica H. Johnson and Jonathan J. Ellis
Published July 11, 2017
On June 23, 2017, Governor Scott approved House Bill
6027, which provides substantively identical changes to the annual financial
reporting requirements for condominium, cooperative, and homeowners’
associations.
Under current law, associations are required to complete annual financial
statements of the previous year’s financial activities and provide the
report to their unit or parcel owners. The complexity of these statements is
based on the annual revenues of the association. Associations having larger
revenues must prepare more detailed financial statements. The associations’
members, however, may vote to allow the association to prepare less detailed
financial statements. Notwithstanding, condominium and cooperative
associations may not prepare less detailed financial statements for more
than three consecutive years.
House Bill 6027 amends the financial reporting requirements for condominium,
cooperative, and homeowners’ associations. Specifically, House Bill 6027:
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removes the provisions requiring or permitting
associations operating fewer than 50 units or parcels, regardless of
their annual revenues, to prepare a report of cash receipts and
expenditures in lieu of financial statements; and
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removes the provisions prohibiting cooperatives and
condominiums from waiving certain financial reporting requirements for
more than three consecutive years.
These changes will
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require condominium, cooperative, and homeowners’
associations to prepare a specific type of financial statement based on
the association’s revenue, as set forth in the statute, unless an
association’s membership votes to prepare a less detailed financial
statement; and
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if approved by a vote of the membership, allow
condominium and cooperative associations to waive more detailed
financial statements indefinitely, but still requiring, at a minimum, a
report of cash receipts and expenditures.
Economically, associations operating fewer than 50 units
or parcels may experience increased costs to the extent they are required to
prepare compiled, reviewed, or audited financial statements, and are no
longer allowed to compile cash receipts and expenditures without a
membership vote. This may force smaller associations to obtain additional
professional services, such as use of an accountant. On the other hand,
condominiums or cooperatives may indefinitely vote to waive preparation of a
specific type of financial statement instead of having to prepare more
detailed financial statement once every four years.
These changes go into effect on July 1, 2017.
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