Every owners corporation is charged with the responsibility of managing common properties. From apartment complexes to condos, owners corporations carry out important functions such as repairs and maintenance, dispute resolution, the management of insurance and the preparation of financial statements.
Financial statements are an important part of any owners corporation. They show how member contributions are being used for the maintenance of common spaces, service delivery and other relevant projects. This is why it's important to have a basic understanding of how to read your owners corporation's financial statements. These documents will allow you to keep better track of spending and expenditures over time.
Understand how much money is under management
Keeping track of your owners corporation's financial statements allows you to find out how much money is under management. This is important because much of the income that your owners corporation obtains comes from member contributions.
You should be aware of how your money is being used by reading these financial documents—particularly the balance sheet.
Determine how much income your owners corporation makes
It also helps to understand the sources of income that your owners corporation has. This information is typically listed in the income statement, and you can single out all income streams that are relevant to the corporation and its activities.
Understanding income sources gives you (and other members) more information regarding investments that the owners corporation has made. You can also compare income versus expenses—and determine if your money is being put to good use.
Calculate levels of debt
In addition to understanding income flows, it helps to know how much debt your owners corporation currently has. High debt levels may affect future income and even result in an increase in member contributions.
One way you can keep track of debt is by looking at the accounts receivables portion of your corporation's financial statements. If many different service providers are yet to be paid, you may choose to take this matter up with the management team to seek clarification.
Understand the expenditure patterns of your owners corporation
In line with analysing income and debt levels, your owners corporation's financial statements can shed light on expenditure patterns over time. For example, you can use bank statements over the past year to determine how much money was spent and for what reasons.
This information is important because members can remain in the loop with regards to spending patterns—and objections can be raised as necessary.Share