Changes to the Florida Statutes Concerning Financial Reporting for Condominium Associations
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The Florida legislature has always given Florida’s condominium associations great flexibility to construct and maintain their own bylaws, rules and regulations in which to govern their communities. In exchange for that flexibility, the Florida Statutes, within Chapter 718, regulate the operation of condominium associations in certain areas. One such area involves the financial reporting requirements of Florida’s condominium associations, which is specifically governed by Section 718.111(13), Florida Statutes. In 2013, the Florida legislature changed and amended a few key aspects of Section 718.111(13), which Florida’s condominium associations must be cognizant of to ensure they remain compliant.
To begin with, the Florida legislature changed the thresholds for a condominium association’s financial reporting requirements. Previously, an association was required to compile financial statements if it had annual revenues of at least $100,000 but less than $200,000. As of 2013, that threshold has been raised to annual revenues of at least $150,000 but less than $300,000. Fla. Stat. § 718.111(13)(a). Additionally, the threshold for an association to have its financial statements formally reviewed was also raised. Previously, the threshold for required formal review was annual revenues of at least $200,000 but less than $400,000. That threshold has now been lifted to annual revenues of at least $300,000 but less than $500,000. Id. Finally, the threshold for an association to have its financial statements audited was raised as well. Previously, the threshold that required audited financial statements was annual revenues of at least $400,000, but that threshold has been raised to annual revenues of at least $500,000. Id.
Under the Florida Statutes, condominium associations that do not meet the threshold levels for the financial statement reporting, reviewing and auditing mentioned above were required to at least prepare a report of cash receipts and expenditures. That level, however, was also adjusted by the Florida legislature in 2013. Now an association with annual revenues of less than $150,000 must prepare a report of cash receipts and expenditures (the previous level was $100,000). Fla. Stat. § 718.111(13)(b). If an association governs a limited number of units then it only need prepare a report of cash receipts and expenditures regardless of the level of its annual revenues. That threshold number of units has also been adjusted. Today, if an association governs 50 or less units, it only needs to create a report of cash receipts and expenditures rather than full financial statements. Id. (The previous threshold was 75 or less units).
The result of these changes is that some associations will find that their reporting requirements have been reduced because of the increased revenue thresholds. On the other hand, because of the decrease in threshold units from 75 to 50, some associations will find that their reporting requirements have increased. In light of these recent changes to the Florida Statutes, it may be prudent for an association to have its declaration and bylaws reviewed and revised. The risk in not doing so is that a future board may not be aware of these recent changes and will ultimately rely on outdated governing documents for running its affairs, causing it to unknowingly violate the Florida Statutes.