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.