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The financial package that comes with your AGM notice is the most important document the corporation produces all year. It tells you whether your strata is well-run, whether your fees are going where they should, and whether you're heading toward a special levy. Most owners don't read it.
You don't need an accounting background. You need 30 minutes and a working understanding of four documents.
Document 1: Statement of Operations (Income Statement)
This shows what the corporation earned (mostly strata fees) and spent over the year. The standard format compares actual to budget, line by line. Look at total revenue vs. budget, total expenses vs. budget, big-ticket lines (insurance, utilities, contracted services), and surplus or deficit.
Document 2: Statement of Financial Position (Balance Sheet)
A snapshot of what the corporation owns and owes at year-end. Assets: cash in operating trust account, cash in CRF trust account, special levy trust accounts, accounts receivable, prepaid expenses. Liabilities: accounts payable, accrued expenses, deferred revenue. Net assets/equity: operating fund balance, contingency reserve fund balance, special levy fund balance(s).
Where to look first: CRF balance (savings for major repairs: should be growing), accounts receivable (compare to last year), accounts payable (should be small), cash position (should cover 1–2 months of expenses).
Document 3: Statement of Cash Flows
Often the least examined document, but useful for spotting timing issues. Three sections: operating activities, investing activities, financing activities (transfers to/from CRF, special levy collections).
Document 4: Notes to the Financial Statements
The most readable document. Auditors include the notes for a reason: they explain anything unusual, summarize accounting policies, and disclose related party transactions.
The CRF in detail
The contingency reserve fund deserves its own attention. Look at: opening balance, contributions, draws, ending balance; what draws were for; interest earned (should be at market rates); comparison to depreciation report.
For the bigger picture on reserve fund planning, see our CRF planning guide.
Yellow flags worth raising at the AGM
- Growing arrears (particularly any single owner with significant outstanding balance)
- Reserve fund below depreciation report targets
- Insurance line up >15% year-over-year
- Repeated operating deficits
- Late annual statements
- Auditor or accounting firm changes
The audit question
Whether the corporation's financial statements are audited is a council decision that should be revisited annually. Audits cost more (typically $4,000–$10,000+), produce stronger assurance, and are increasingly required by major lenders, insurers, and Form B requestors.