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? You will receive audited statements that can be relied upon to present an unbiased view of the Corporation’s affairs. They allow you to assess the health of your condominium as well as the stewardship of your Board of Directors They give potential purchasers peace of mind when evaluating whether to invest in the condominium corporation (i.e. buy a unit) They provide assurance that your condominium is operating in accordance with the Condominium Act and regulations. Includes filing of required income tax and information returns There are several key elements that are typically included in a coop or condo audit. These include: Reviewing and testing financial transactions: The CPA will review and test the financial transactions of the coop or condo to ensure that they are properly recorded and supported by appropriate documentation. Examining internal controls: The CPA will examine the internal controls in place at the coop or condo to ensure that they are effective in preventing and detecting errors or fraud. Evaluating compliance with laws and regulations: The CPA will evaluate whether the coop or condo is following relevant laws and regulations, including those related to taxes, employment, and financial reporting. Providing recommendations for improvement: Based on the audit findings, the CPA may provide recommendations for improving the financial management and operations of the coop or condo. Coop and condo audits can be beneficial for business owners in several ways. For one, they can provide assurance that the building is being managed in a financially responsible manner. This can be especially important for business owners who are considering investing in a coop or condo, as the audit can help to identify any potential financial risks. Additionally, coop and condo audits can help to identify any potential financial problems or irregularities that may need to be addressed, which can help to protect the value of the building and the investment of the business owners. OTHER SERVICES WE OFFER FOR CONDOMINIUM CORPORATIONS Corporate Income Tax filing – If your corporation does not require the preparation of financial statements we can still assist in the filing of required income tax returns and not-for-profit information returns, where applicable. Frequently Asked Questions: Why 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. There are instances where the courts are called to appoint an auditor. That usually takes place when an auditor has not been appointed by the owners for whatever reason. 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. Having said that, 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? There are three entities entitled to request the auditor’s presence at the AGM: The auditor As stated in the section above, the auditor has a right to attend an owners meeting. No one can prevent them from being present. The corporation The corporation can require the auditor to be present. This is, in fact, done in the vast majority of cases. If the corporation wants the auditor to attend, they must provide them with at least 5 days’ notice. In such case, the auditor must attend. Naturally, it makes more sense to give them much more notice to ensure they are available. In most cases, you want to schedule your AGM in consultation with the auditor to make sure they are available. The owners Any owner (even just a single one) may require the auditor (or a former auditor) to be present at a meeting of owners for the purpose of answering questions concerning the basis of the auditor’s opinion in the auditor’s report. This is an important right as the auditor is appointed by and for the owners. It is therefore not up to the board (or management) to decide whether to invite the auditor. A single owner can make that request by sending a written notice