Preparing communications for financial reporting, whether written or oral, requires a thorough understanding of the financial affairs of the condominium. suggested information will meet the needs of most others. Another Trust Building Communication In addition to annual and interim financial statements, a communication that builds further trust with owners is a report from the board providing a short summary of key highlights from the period covered (annual or interim) by the financial statements or it could be a detailed review of the significant components, changes and transactions in each of the statements. This report can be particularly helpful in explaining major variations from budgets and the previous year’s actual results. Such a report demonstrates to the owners that the board
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understands the finances of the corporation and is actively managing these affairs to achieve desired outcomes. Another possible feature of this report is projecting results to the end of the year for operations and the reserve fund. This informs owners as early as possible if budgets are likely to be achieved or not and, if necessary, the steps the board is taking to hopefully get back on track. Looking into the future is full of challenges so it is important to have a statement right at the beginning of a section communicating projections that warns the reader that predictions of events and outcomes could be very different in both timing and amounts from what will actually happen.
Some Final Thoughts Financial transparency through reporting to owners is not the only key to building trust. Prudent budgeting and effective controls over operations with an appropriate level of common element fees with predictable and reasonable increases are likely more important factors. This is a topic for another time. Financial transparency can contribute to trust building. While it may not work with every owner, as we know that pleasing everyone is impossible, increased communication can meet the needs of most for information about finances. Finally, perhaps the most important reason for greater financial transparency is the preparation itself. As teachers know, to present a lecture requires thorough knowledge of the topic. Preparing communications for financial reporting, whether in a written report or in an oral presentation, requires a thorough understanding of the financial affairs of the condominium. This perhaps is the real value of financial transparency. C V