Financial turnover

What has to change hands

Financial turnover is not just closing out a bank account. In Florida, the declarant must deliver the association's financial records, its funds, and its tangible property to the new board, alongside every contract, insurance policy, and permit tied to the community's finances. That is the category list to expect: money, financial records, contracts, insurance. The exact statutory checklist is Florida's; your state may itemize it differently, so pull your own state's turnover statute and your declaration's transition section before assuming a document is or is not owed to you. [S2]

Read next: Bank-account turnover covers the mechanics of moving signatory control, and Records turnover covers the non-financial paperwork.

The independent audit

Some states require more than a document drop. Florida condominium associations must have their financial records independently audited for the entire period since incorporation, not just the most recent year, and the developer pays for it.

"Must be audited for the period from the incorporation of the association" by "an independent certified public accountant," prepared under generally accepted accounting principles and generally accepted auditing standards, at the developer's expense.

Source: Florida Statutes, section 718.301, The Florida Senate

Florida's homeowner association statute sets out a close parallel: financial records must be audited by an independent CPA for the period since incorporation, unless the association was already having itself audited annually, in which case the audit only has to reach back to the last one.

"Financial records... shall be audited by an independent certified public accountant for the period from the incorporation of the association."

Source: Florida Statutes, section 720.307, The Florida Senate

Not every state conditions turnover on an independent audit at all. Check your own state's community association act and your declaration for whether one is required, who commissions it, and who pays. See Transition audits for what the audit itself should cover.

When the numbers do not add up

A board that finds the developer's figures do not match the bank statements is not stuck taking the developer's word for it. Engage the association's own fiduciary obligation seriously here: the board that just took over owes the association an honest look at what it inherited, not a rubber stamp on the outgoing developer's books. That means bringing in the association's own CPA or attorney to review the discrepancy before accepting the handoff as complete, rather than assuming an unexplained gap will resolve itself.

For a fuller walkthrough of the full turnover playbook, the Foundation for Community Association Research and CAI publish a "Best Practices Report: Transition from Developer Control," worth reading directly for step-by-step guidance beyond what any single lesson here can cover. [S10]