Does My Condominium Need an Audit?
What Do You and Your Corporation Get Out of Audited Financial Statements? Do you actually need an audit? With any large investment, it is essential to have an independent opinion of financial health, and that’s exactly what an audit does for you. WHEN DO YOU NEED AN AUDIT? If your condominium has 25 units or more, then the answer is Yes. The Condominium Act requires that any corporation with 25 or more units must have an annual audit prepared. What if our corporation has less than 25 units? Your condominium can elect to not have an audit completed. You do need to have unanimous, written consent from all owners in order to waive the audit obligation. Whether or not you need to have an annual audit completed, you do need to ensure you are meeting your corporate tax filing obligations. WHAT ARE THE BENEFITS? Audited Statements: Receive audited statements that can be relied upon to present an unbiased view of the Corporation’s affairs. Assess Financial Health: Audits allow you to assess the health of your condominium as well as the stewardship of your Board of Directors. Peace of Mind for Purchasers: Audited statements give potential purchasers peace of mind when evaluating whether to invest in the condominium corporation (i.e. buy a unit). Regulatory Assurance: Provides assurance that your condominium is operating in accordance with the Condominium Act and regulations. Tax Filings: Includes filing of required income tax and information returns. TYPICAL ELEMENTS OF A CONDO AUDIT Reviewing and Testing Financial Transactions: The CPA reviews and tests financial transactions to ensure they are properly recorded and supported by appropriate documentation. Examining Internal Controls: The CPA examines internal controls to ensure they are effective in preventing and detecting errors or fraud. Evaluating Compliance: The CPA evaluates whether the condo is following relevant laws and regulations, including taxes, employment, and financial reporting. Providing Recommendations: Based on audit findings, the CPA may provide recommendations for improving financial management and operations. WHY ARE COOP AND CONDO AUDITS IMPORTANT? Coop and condo audits can be beneficial for business owners in several ways: Financial Responsibility: They provide assurance that the building is being managed in a financially responsible manner. Risk Identification: The audit helps identify any potential financial risks, protecting the value of the building and the investment of business owners. Problem Identification: Audits can identify any potential financial problems or irregularities that may need to be addressed. OTHER SERVICES WE OFFER FOR CONDOMINIUM CORPORATIONS Corporate Income Tax Filing: Even if your corporation does not require financial statement preparation, we can still assist in filing required income tax returns and not-for-profit information returns, where applicable. Frequently Asked Questions: Why Does a Condo Building Need an Auditor? Auditing is an essential part of running a successful business. It helps to identify potential risks and areas for improvement while ensuring compliance with regulations and standards. Does Every Corporation Need an Auditor? One of the very few exceptions to this is if your condo consists of less than 25 units and, as of the date of the owners meeting, all of the owners have consented in writing to dispense of the audit until the next AGM. This dispense is required on an annual basis. So, if you have 25 units or more, you require an auditor. Who Appoints the Auditor? Auditors are not appointed by the board or by management. Auditors are appointed by and for the owners. This is done at each annual general meeting. The auditor holds that office until the close of the next annual general meeting – or stated otherwise, the board cannot remove them before the term is up. Must the Auditor Be Present at the AGM? Ultimately, the auditor has a statutory right to attend a meeting of owners and to be heard on any part of the business of the meeting that concerns the auditor. For that reason, the corporation has an obligation to give the auditor notice of all meetings of owners and of all other communications relating to the meetings that owners are entitled to receive. However, the Condo Act does not require the auditor to be present. What is required is that the auditor be granted the possibility to attend and speak to the owners. Who Decides Whether the Auditor Is to Attend the AGM? The Auditor: The auditor has a right to attend an owners meeting, and no one can prevent them from being present. The Corporation: The corporation can require the auditor to be present. If so, they must provide at least 5 days’ notice. The Owners: Any owner (even just a single one) may require the auditor to attend the AGM to answer questions concerning the basis of the auditor’s opinion in the report. The notice must be sent at least 5 days before the meeting. CRSP Connect Role: Coop and Condo Audits Coop and condo audits are important for ensuring the financial stability and integrity of coop and condo buildings. By hiring a CRSP Connect, who has experience in this area, you can be confident that the audit is completed with the best quality and within the required time frame. WHAT ARE THE BENEFITS?