As the new CFO of Advantage Management, I want to say hello. I also want to thank all the associations for graciously allowing me time to get acquainted with your buildings and financials. As we move forward with improvements, it is beneficial to share knowledge so we can each perform the best in whatever role we may find ourselves. Not everyone has a financial background, so we put together information you may find helpful. I look forward to working with more of you, and we will continue to improve together.

Accurate interpretation of financial reporting is the foundation of successful business planning. This principle applies just as strongly to homeowners and condominium associations. Board members have a fiduciary responsibility to safeguard the association’s financial health, and that responsibility begins with a careful, consistent review of the monthly financial package.

Under Generally Accepted Accounting Principles (GAAP), specific financial reports are required to promote transparency, accountability, and long-term fiscal stability. Together, these reports provide a complete picture of how association funds are collected, spent, and preserved. While there are a number of other supporting reports and schedules, below is a breakdown of the “Big Five” financial reports every Board member should understand and regularly review.

1. The Balance Sheet
The Balance Sheet provides a snapshot of the association’s overall financial position at a specific point in time—typically the last day of the month. It summarizes what the association owns (Assets), what it owes (Liabilities), and the remaining value (Net Worth or Fund Balance). By subtracting Liabilities from Assets, the Board can clearly see the association’s financial strength. This report confirms the exact amount of cash held in operating and reserve accounts, lists outstanding obligations, and, as the name implies, must always balance. A well-maintained Balance Sheet helps Board members assess liquidity and long-term financial stability.

2. Statement of Income and Expense
Often considered the most important management tool available to the Board, the Statement of Income and Expense lays out how the association performed financially during the reporting period. It compares actual income and expenses for the month against the approved budget and highlights any variance, positive or negative. The year-to-date columns allow Board members to identify trends, spot spending overruns early, and evaluate whether income is keeping pace with expenses. This report plays a critical role in controlling costs, making informed decisions during the year, and preparing an accurate and realistic budget for the following fiscal year.

3. The General Ledger (GL)
The General Ledger is the detailed backbone of the association’s accounting system. It records every financial transaction—income, expenses, transfers, and adjustments—organized by account code and date. When a Board member or manager needs to investigate a specific charge, vendor payment, or owner transaction, the General Ledger provides an audit trail. This level of detail is essential for ensuring accuracy, answering owner questions, supporting audits, and verifying that all transactions are properly categorized.

4. Check Register
The Check Register offers a clear and transparent listing of all payments issued by the association during the reporting period. It typically includes the check or transaction number, date, payee, amount, and a brief description of the expense. Reviewing this report allows Board members to confirm that payments were made to legitimate vendors, match approved invoices and contracts, and verify that proper authorization procedures were followed. Regular review of the Check Register is a key internal control against errors or improper disbursements.

5. Payable & Receivable Delinquency Reports
These two reports focus on the association’s future cash flow. Primarily, what money is owed and what money is expected to come in:

• Accounts Payable Report: Lists all unpaid bills and obligations the association has incurred but not paid. This helps the Board anticipate upcoming expenses and ensure sufficient cash is available to meet those commitments.
• Delinquency Report: Identifies unit owners who are not current on assessments, late fees, fines, or legal reimbursements. Because assessments are typically the association’s primary source of income, this report is critical for monitoring cash flow, enforcing collection policies, and maintaining overall financial stability.

Together, these five reports provide the financial insight the Board members need to meet their fiduciary duties and make informed, responsible decisions on behalf of the association.