Florida Senate - 2013 SB 1746
By Senator Braynon
36-01161-13 20131746__
1 A bill to be entitled
2 An act relating to community associations; amending s.
3 718.111, F.S.; revising requirements relating to the
4 preparation and completion of the homeowners’
5 association’s annual financial report; revising the
6 requirements for a financial report based on the
7 association’s number of units; revising the
8 requirements for a financial report based on the
9 amount of a condominium’s revenues; amending s.
10 719.104, F.S.; revising requirements with respect to
11 cooperative financial statements and reports; revising
12 application; amending s. 720.303, F.S.; revising
13 requirements relating to the preparation and
14 completion of the condominium association’s annual
15 financial report; revising the requirements for a
16 financial report based on the community’s size;
17 providing an effective date.
18
19 Be It Enacted by the Legislature of the State of Florida:
20
21 Section 1. Subsection (13) of section 718.111, Florida
22 Statutes, is amended to read:
23 718.111 The association.—
24 (13) FINANCIAL REPORTING.—Within 90 days after the end of
25 the fiscal year, or annually on a date provided in the bylaws,
26 the association shall prepare and complete, or contract for the
27 preparation and completion of, a financial report for the
28 preceding fiscal year. Within 21 days after the final financial
29 report is completed by the association or received from the
30 third party, but not later than 120 days after the end of the
31 fiscal year or other date as provided in the bylaws, the
32 association shall mail to each unit owner at the address last
33 furnished to the association by the unit owner, or hand deliver
34 to each unit owner, a copy of the financial report or a notice
35 that a copy of the financial report will be mailed or hand
36 delivered to the unit owner, without charge, upon receipt of a
37 written request from the unit owner. The division shall adopt
38 rules setting forth uniform accounting principles and standards
39 to be used by all associations and addressing the financial
40 reporting requirements for multicondominium associations. The
41 rules must include, but not be limited to, standards for
42 presenting a summary of association reserves, including a good
43 faith estimate disclosing the annual amount of reserve funds
44 that would be necessary for the association to fully fund
45 reserves for each reserve item based on the straight-line
46 accounting method. This disclosure is not applicable to reserves
47 funded via the pooling method. In adopting such rules, the
48 division shall consider the number of members and annual
49 revenues of an association. Financial reports shall be prepared
50 as follows:
51 (a) An association that meets the criteria of this
52 paragraph shall prepare a complete set of financial statements
53 in accordance with generally accepted accounting principles. The
54 financial statements must be based upon the association’s total
55 annual revenues, as follows:
56 1. An association with total annual revenues of $125,000
57 $100,000 or more, but less than $200,000, shall prepare compiled
58 financial statements.
59 2. An association with total annual revenues of at least
60 $250,000 $200,000, but less than $400,000, shall prepare
61 reviewed financial statements.
62 3. An association with total annual revenues of $500,000
63 $400,000 or more shall prepare audited financial statements.
64 4.(b)1. An association with total annual revenues of less
65 than $125,000 $100,000 shall prepare a report of cash receipts
66 and expenditures.
67 5.2. An association that operates fewer than 50 75 units,
68 regardless of the association’s annual revenues, shall prepare a
69 report of cash receipts and expenditures in lieu of financial
70 statements required by this paragraph (a).
71 6.3. A report of cash receipts and disbursements must
72 disclose the amount of receipts by accounts and receipt
73 classifications and the amount of expenses by accounts and
74 expense classifications, including, but not limited to, the
75 following, as applicable: costs for security, professional and
76 management fees and expenses, taxes, costs for recreation
77 facilities, expenses for refuse collection and utility services,
78 expenses for lawn care, costs for building maintenance and
79 repair, insurance costs, administration and salary expenses, and
80 reserves accumulated and expended for capital expenditures,
81 deferred maintenance, and any other category for which the
82 association maintains reserves.
83 (b)(c) An association may prepare, without a meeting of or
84 approval by the unit owners:
85 1. Compiled, reviewed, or audited financial statements, if
86 the association is required to prepare a report of cash receipts
87 and expenditures;
88 2. Reviewed or audited financial statements, if the
89 association is required to prepare compiled financial
90 statements; or
91 3. Audited financial statements if the association is
92 required to prepare reviewed financial statements.
93 (c)(d) If approved by a majority of the voting interests
94 present at a properly called meeting of the association, an
95 association may prepare:
96 1. A report of cash receipts and expenditures in lieu of a
97 compiled, reviewed, or audited financial statement;
98 2. A report of cash receipts and expenditures or a compiled
99 financial statement in lieu of a reviewed or audited financial
100 statement; or
101 3. A report of cash receipts and expenditures, a compiled
102 financial statement, or a reviewed financial statement in lieu
103 of an audited financial statement.
104
105 Such meeting and approval must occur before the end of the
106 fiscal year and is effective only for the fiscal year in which
107 the vote is taken, except that the approval may also be
108 effective for the following fiscal year. With respect to an
109 association to which the developer has not turned over control
110 of the association, all unit owners, including the developer,
111 may vote on issues related to the preparation of financial
112 reports for the first 2 fiscal years of the association’s
113 operation, beginning with the fiscal year in which the
114 declaration is recorded. Thereafter, all unit owners except the
115 developer may vote on such issues until control is turned over
116 to the association by the developer. Any audit or review
117 prepared under this section shall be paid for by the developer
118 if done before turnover of control of the association. An
119 association may not waive the financial reporting requirements
120 of this section for more than 3 consecutive years.
121 Section 2. Subsection (4) of section 719.104, Florida
122 Statutes, is amended to read:
123 719.104 Cooperatives; access to units; records; financial
124 reports; assessments; purchase of leases.—
125 (4) FINANCIAL REPORT.—
126 (a) Within 90 60 days after following the end of the fiscal
127 or calendar year or annually on such date as is otherwise
128 provided in the bylaws of the association, the board of
129 administration of the association shall mail or furnish by
130 personal delivery to each unit owner a complete financial report
131 of actual receipts and expenditures for the previous 12 months,
132 or a complete set of financial statements for the preceding
133 fiscal year prepared in accordance with generally accepted
134 accounting procedures. The report shall show the amounts of
135 receipts by accounts and receipt classifications and shall show
136 the amounts of expenses by accounts and expense classifications
137 including, if applicable, but not limited to, the following:
138 1. Costs for security;
139 2. Professional and management fees and expenses;
140 3. Taxes;
141 4. Costs for recreation facilities;
142 5. Expenses for refuse collection and utility services;
143 6. Expenses for lawn care;
144 7. Costs for building maintenance and repair;
145 8. Insurance costs;
146 9. Administrative and salary expenses; and
147 10. Reserves for capital expenditures, deferred
148 maintenance, and any other category for which the association
149 maintains a reserve account or accounts.
150 (b) The division shall adopt rules that may require that
151 the association deliver to the unit owners, in lieu of the
152 financial report required by this section, a complete set of
153 financial statements for the preceding fiscal year. The
154 financial statements shall be delivered within 90 days following
155 the end of the previous fiscal year or annually on such other
156 date as provided in the bylaws. The rules of the division may
157 require that the financial statements be compiled, reviewed, or
158 audited, and the rules shall take into consideration the
159 criteria set forth in s. 719.501(1)(j). The requirement to have
160 the financial statements compiled, reviewed, or audited does not
161 apply to associations if a majority of the voting interests of
162 the association present at a duly called meeting of the
163 association have determined for a fiscal year to waive this
164 requirement. In an association in which turnover of control by
165 the developer has not occurred, the developer may vote to waive
166 the audit requirement for the first 2 years of the operation of
167 the association, after which time waiver of an applicable audit
168 requirement shall be by a majority of voting interests other
169 than the developer. The meeting shall be held prior to the end
170 of the fiscal year, and the waiver shall be effective for only
171 one fiscal year. This subsection does not apply to a cooperative
172 that consists of 50 or fewer units.
173 Section 3. Subsection (7) of section 720.303, Florida
174 Statutes, is amended to read:
175 720.303 Association powers and duties; meetings of board;
176 official records; budgets; financial reporting; association
177 funds; recalls.—
178 (7) FINANCIAL REPORTING.—Within 90 days after the end of
179 the fiscal year, or annually on the date provided in the bylaws,
180 the association shall prepare and complete, or contract with a
181 third party for the preparation and completion of, a financial
182 report for the preceding fiscal year. Within 21 days after the
183 final financial report is completed by the association or
184 received from the third party, but not later than 120 days after
185 the end of the fiscal year or other date as provided in the
186 bylaws, the association shall, within the time limits set forth
187 in subsection (5), provide each member with a copy of the annual
188 financial report or a written notice that a copy of the
189 financial report is available upon request at no charge to the
190 member. Financial reports shall be prepared as follows:
191 (a) An association that meets the criteria of this
192 paragraph shall prepare or cause to be prepared a complete set
193 of financial statements in accordance with generally accepted
194 accounting principles as adopted by the Board of Accountancy.
195 The financial statements shall be based upon the association’s
196 total annual revenues, as follows:
197 1. An association with total annual revenues of $100,000 or
198 more, but less than $200,000, shall prepare compiled financial
199 statements.
200 2. An association with total annual revenues of at least
201 $200,000, but less than $400,000, shall prepare reviewed
202 financial statements.
203 3. An association with total annual revenues of $400,000 or
204 more shall prepare audited financial statements.
205 4.(b)1. An association with total annual revenues of less
206 than $100,000 shall prepare a report of cash receipts and
207 expenditures.
208 2. An association in a community of fewer than 50 parcels,
209 regardless of the association’s annual revenues, may prepare a
210 report of cash receipts and expenditures in lieu of financial
211 statements required by paragraph (a) unless the governing
212 documents provide otherwise.
213 5.3. A report of cash receipts and disbursement must
214 disclose the amount of receipts by accounts and receipt
215 classifications and the amount of expenses by accounts and
216 expense classifications, including, but not limited to, the
217 following, as applicable: costs for security, professional, and
218 management fees and expenses; taxes; costs for recreation
219 facilities; expenses for refuse collection and utility services;
220 expenses for lawn care; costs for building maintenance and
221 repair; insurance costs; administration and salary expenses; and
222 reserves if maintained by the association.
223 (b)(c) If 20 percent of the parcel owners petition the
224 board for a level of financial reporting higher than that
225 required by this section, the association shall duly notice and
226 hold a meeting of members within 30 days of receipt of the
227 petition for the purpose of voting on raising the level of
228 reporting for that fiscal year. Upon approval of a majority of
229 the total voting interests of the parcel owners, the association
230 shall prepare or cause to be prepared, shall amend the budget or
231 adopt a special assessment to pay for the financial report
232 regardless of any provision to the contrary in the governing
233 documents, and shall provide within 90 days of the meeting or
234 the end of the fiscal year, whichever occurs later:
235 1. Compiled, reviewed, or audited financial statements, if
236 the association is otherwise required to prepare a report of
237 cash receipts and expenditures;
238 2. Reviewed or audited financial statements, if the
239 association is otherwise required to prepare compiled financial
240 statements; or
241 3. Audited financial statements if the association is
242 otherwise required to prepare reviewed financial statements.
243 (c)(d) If approved by a majority of the voting interests
244 present at a properly called meeting of the association, an
245 association may prepare or cause to be prepared:
246 1. A report of cash receipts and expenditures in lieu of a
247 compiled, reviewed, or audited financial statement;
248 2. A report of cash receipts and expenditures or a compiled
249 financial statement in lieu of a reviewed or audited financial
250 statement; or
251 3. A report of cash receipts and expenditures, a compiled
252 financial statement, or a reviewed financial statement in lieu
253 of an audited financial statement.
254 Section 4. This act shall take effect July 1, 2013.