At the end of an association’s fiscal year, the association’s CPA prepares a written report regarding the association’s financial condition. The information used in preparing the report includes management representations and statements concerning the association’s assets and liabilities, including any litigation that could have an adverse impact on the association (pursuant to FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies).
Unless an association’s governing documents impose more stringent standards, the association must prepare a review of its financial statement in accordance with generally accepted accounting principles (GAAP) by a licensee of the California Board of Accountancy (CBA) for any fiscal year in which the gross income to the association exceeds seventy-five thousand dollars ($75,000). (Civ. Code § 5305.) Some sets of governing documents require an association to perform a formal audit of the financial statement, not merely a review.
Distribution of Review
A copy of the review of the financial statement must be delivered to all of the association’s members within one hundred and twenty (120) days after the close of the association’s fiscal year. (Civ. Code § 5305.)
Individual Delivery Required
The review must be delivered to all members by individual delivery. (Civ. Code § 5305.) This includes any of the following methods: (Civ. Code § 4040.)
- First-class mail, postage prepaid, registered or certified mail, express mail, or overnight delivery by an express service carrier; or
- E-mail, facsimile, or other electronic means, if the recipient has consented, in writing, to that method of delivery.
