Do You have Financial Accountability?

A homeowners association in Austin is being sued for failure to conduct an audit, failure to allow homeowners access to financial records, and other money-mismanagement type claims. As stated in this recent story: homeowners are questioning the financial practices of the Sunchase condominium association board and management company. The Austin Police Department is also investigating the association.

The story once again highlights the trending topic of today: Financial accountability of the board and community association manager.  Do you know the legal requirements for a financial audit? Colorado law, at C.R.S. 38-33.3-303(4)(b)(II), requires community associations to conduct financial audits if both of the following requirements are met:

1. The association has annual revenues or expenditures of at least two hundred and fifty thousand dollars, AND
2. An audit is requested by the owners of at least one-third of the units represented by the association.

However, your governing documents could contain a more stringent requirement than the above and require, for example, audits to be conducted on an annual basis. If your governing documents are stricter than Colorado law, you must follow the requirement contained in your governing documents.

As far as access to financial records, C.R.S. 38-33.3-317(1) requires the association to keep “financial and all other records” reasonably available for examination and copying by a unit owner and such owner’s authorized agents. And, HB 1237, a bill that was just signed into law by the Governor and effective January 1, 2013, provides greater clarification on the types of financial and other records that must be kept by the Association.  See our most recent blog for more information on the upcoming record-keeping and access requirements.

The need for board and manager financial accountability is a constant theme in today’s community association news. By knowing and following the legal requirements regarding financial record-keeping, audits and other financial obligations, not only will you be avoiding the problems currently faced by the Sunchase condominium association, but you will be well on your way to fostering transparency and credibility with your community.