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Follow the Money Proper Financial Recordkeeping

 If you want to find out about the history of any town, region or country, head  to a museum or look it up on the Internet. If you want to find out about your  family’s history, look at your photo album, whether it’s in a book or online. And if you want to find out your medical history, good  luck!  

 But if you want to find past financial records of a condo or co-op development,  that history is composed in all sorts of documents, financial records, minutes  of meetings, election results, invoices, and other records that are kept from  year to year. How are these records kept, and what are the most important  pieces of the “historical record” for board members and managers? The answers are complicated, but fortunately,  several financial professionals have agreed to help us out.  

 What Should You Know

 To begin with, what is the minimum financial information that board members  should know and understand about their buildings? While boards need a financial  professional in their corner, that doesn’t mean that there isn’t some basic information that they should know and understand on their own.  Obviously, the accountant or other expert can’t be there all the time!  

 Professionals interviewed by New England Condominium mentioned quite a few  important items as essential. These include shareholder or unit-owner arrears,  cash balances, unusual items such as special repairs or overtime, long-term  unpaid invoices, reserve activity and balances, profit-and-loss statements (also called income statements), accounts payable,  accounts receivable, subsidiary ledgers, bank reconciliations, check registers,  general journals, open liabilities, expense and income vs. the budget, and  major capital projects coming up.  

 Many of these items are contained in a monthly report provided by the managing  agent, which is reviewed by the treasurer or other board members each month. “Generally the property managers that we deal with are very sophisticated. They  know the industry very well, there’s tons of checks and balances that both the property management company, the  specific property manager, and then the treasurer and board of trustees of the  condo, they get lots of monthly information. They’re able to compare year-to-date and month-to-date results with the budget,” says Mark Love, CPA, a principal in the Worcester, Massachusetts-based  accounting firm of Love, Jarominski & Raymond, LLP.  

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