Adams Stirling PLC


QUESTION: I cannot find anywhere in our bylaws or the Davis-Stirling Act that requires the board to approve the association's unaudited monthly financial statements. Is the board required to approve monthly financial statements?

ANSWER: You can't find it because it's not there. Under the Davis-Stirling Act boards have a duty to review the association's finances. There is nothing in the Act about approving unaudited monthly financials.

Unaudited Financials. Although boards could approve monthly financial statements, doing so carries some risk. As was pointed out in last week's newsletter by William Erlanger, CPA, interim financials are a work in progress and the board could be approving inaccurate numbers.

Industry Practice. Industry practice is to have minutes reflect that "A monthly financial report was submitted to the Board." or "The Treasurer's report was given." or "An interim financial statement was received by the Board along with the Treasurer's report." When the Treasurer's report is given, no action is required by the board, i.e., there is no need to make a motion. (Robert's Rules, 11th ed., p. 473, 477, 479.) The same is true for committee reports. The board does not approve a committee's report, it "receives" it. Moreover, committee reports (and interim financials) are not made part of the minutes unless there is an important reason to do so. (Robert's Rules, 11th ed., p. 473.)

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.

Adams Stirling PLC