Year-End Condo Audit in Ontario: What the Board Prepares Before the Auditor Arrives
(From a Condominium Management Expert)
Practical Guidance for Smarter Governance in London & Sarnia, Ontario
The fiscal year has closed, the auditor has sent a request list, and the board is wondering how much of it lands on them. Some directors have never been through a condo audit before. Others remember last year's ran late and pushed the annual general meeting back.
A smooth audit is mostly decided before the auditor arrives. This guide covers the audit rules in sections 60 to 71 of the Condominium Act, 1998, what your records should look like at year end, what the board itself has to do, and what your management company should be handling so the audited statements reach owners on time.
Does every condo corporation in Ontario need a yearly audit?
Almost every corporation does. This is not legal advice, but generally speaking under Ontario law, section 67 (1) of the Condominium Act, 1998 says the auditor shall, every year, make the examination needed to report on the financial statements to the corporation on behalf of the owners.
The owners appoint that auditor at each annual general meeting under section 60 (2). If they do not, the auditor already in office stays on until a successor is appointed.
There is one narrow exception. Under section 60 (5), a corporation with fewer than 25 units that has held its turn-over meeting can skip the audit until the next AGM, but only if all the owners consent in writing. Section 60 (6) says an owner whose common expenses are 30 days or more in arrears cannot give that consent. For most boards in London Ontario and Sarnia Ontario, the audit happens every year.
What records should a condo board have ready for the year-end audit?
Have the full year's books closed and every supporting document in one place before the auditor's first visit. Section 67 (2) gives the auditor a right of access at all times to all records, documents, accounts and vouchers, so missing paper slows everything down.
A practical year-end file for most corporations:
• Bank and investment statements for every operating and reserve account, with each month reconciled
• The general ledger, trial balance and year-end adjusting entries
• A list of owners in arrears at year end, with any liens registered
• Vendor invoices, contracts and approvals for major spending
• Reserve fund transactions matched to the current reserve fund study
• Board minutes for the year, especially motions approving spending, contracts and transfers
• Insurance policies, any open claims and any legal matters the corporation is part of
Start with the reserve fund. Under section 67 (5), the auditor must say whether the statement of reserve fund operations fails to fairly present the information in the reserve fund studies the auditor has received, so hand over the latest study and any updates. For a refresher on how the study is built, read our guide: Reserve Fund Studies in Ontario: What Every Board Must Know.
What does the condo board have to do during the audit?
The board approves the statements, answers the auditor's questions and makes sure the statements and report reach owners with the AGM notice. The audit itself is the auditor's job.
Under section 66 (3), the board shall approve the financial statements before placing them before an annual general meeting, and section 66 (4) says two authorized directors show that approval by signing at the bottom of the balance sheet. Plan a board meeting for that approval so the signing does not hold up the AGM package.
Section 67 (6) says the auditor presents the report to the audit committee, or to the board if there is no audit committee. Under section 68 (1), a board with more than six directors may elect an audit committee, and section 68 (2) says it needs at least three directors. Most smaller London boards simply receive the report as a full board.
Then the timing. Section 45 (2) requires the AGM within six months of the end of each fiscal year, and section 69 (2) says a copy of the financial statements and the auditor's report must be attached to the AGM notice. A late audit squeezes that schedule. When the draft statements come back, our guide How to Read Your Condo Financial Statements: What Ontario Boards Should Understand walks through what to look at before you sign.
What should your condo management company handle before the auditor arrives?
Your current manager should do the year-end close and assemble the audit file, so directors are reviewing and approving rather than hunting for paper. Section 67 (2) lets the auditor require information and explanations from people under contract to manage the property, which includes your manager.
What that looks like in practice for condo corp management:
• Every bank and reserve account reconciled to year end
• Arrears, prepaid fees and accrued invoices worked out and listed
• The auditor's request list answered in one organized package
• Auditor questions logged and answered without directors chasing them
• Draft statements checked against the budget and the reserve fund study before they go to the board
• Approval, signing and AGM package dates set well inside the six months allowed by section 45 (2)
One rule keeps this honest. Section 61 (b) says a condominium manager providing management services to the corporation cannot act as its auditor, so the manager prepares the records and the auditor independently examines them.
At Sapphire Condominium Management, year-end audit support is part of our financial service for boards in London and Sarnia. If you want a second opinion on your financial statements before the next audit, you can request a free financial review on us.
What happens if the audit finds a problem?
The auditor says so in the report, and the board deals with it in the open. Under section 67 (4), the auditor must include the statements it considers necessary if the financial statements do not meet the requirements of the Act and the regulations.
Owners can ask about it. Section 70 (3) lets the corporation or an owner require the auditor to attend a meeting of owners with at least five days' written notice, and section 70 (6) says the auditor must answer questions about how the opinion was formed.
If a material problem surfaces after the AGM, section 71 (1) says the board shall amend the statements, and section 71 (4) says the board must mail or deliver the amended auditor's report to owners. Treat a qualified opinion or a repeat finding as a signal to ask your manager what will change before next year. For more on getting the AGM itself right, read our guide: How to Prepare for Your Condo’s Annual General Meeting (AGM) in Ontario.
Frequently Asked Questions
Q: Does a small condo corporation in London Ontario need an audit every year?
A: Usually yes. Section 60 (5) of the Condominium Act, 1998 lets a corporation with fewer than 25 units that has held its turn-over meeting skip the audit until the next AGM, but only if every owner consents in writing, and owners 30 days or more in arrears cannot consent. This is not legal advice.
Q: When must audited condo financial statements go to owners in Ontario?
A: They go out with the notice of the annual general meeting. Section 69 (2) of the Condominium Act, 1998 requires a copy of the financial statements and the auditor's report to be attached to that notice, and section 45 (2) requires the AGM within six months of the fiscal year end.
Q: Can our condo manager also be our auditor in Ontario?
A: No. Section 61 (b) of the Condominium Act, 1998 says a condominium manager who provides management services to the corporation cannot act as its auditor. Your manager prepares the books and the audit file, and an independent auditor appointed by the owners under section 60 examines them and reports.
Related Reading
→ Reserve Fund Studies in Ontario: What Every Board Must Know
→ How to Read Your Condo Financial Statements: What Ontario Boards Should Understand
→ How to Prepare for Your Condo’s Annual General Meeting (AGM) in Ontario