Condominiums and Residential Associations

Industry context

A change of building manager often reveals accounts no one had checked.

Condominiums and associations manage fees, reserve funds, building works and service contracts with money from all owners. Under the Civil Code, the building manager must account to the owners’ meeting every year and whenever required (art. 1,348, VIII). SGEx reviews each administration’s accounts, audits works and contracts and determines amounts in dispute.

Common situations in this industry

• Audit of accounts when the building manager or management company changes.
• Accounts of building managers and management companies, including in court.
• Works and renovations with suspected overpricing or services not performed.
• Cost sharing, reserve funds, special assessments and arrears in dispute.
• Residents’ associations and gated communities with contested fees.

How SGEx works

• By administration. Movements organised by the term of each manager or management company.
• Document by document. Each payment checked against invoice, contract, quote and approval by the owners’ meeting.
• Building works. Amounts paid compared with quotes, measurements and what was actually built.

The report shows, administration by administration, what came in, what went out and what lacks supporting documents.

What We Solve

• Do the accounts balance? Reconciling trial balances, bank statements and supporting documents.
• Are payments supported? Examining invoices, contracts and approvals for each expense.
• Did the works cost what they should? Comparing quotes, measurements, payments and execution.
• Is the cost sharing correct? Checking ownership fractions, allocation criteria and special assessments.
• What are the actual arrears? Determining unit balances, settlements and collections.
• Was the reserve fund preserved? Movements, investment and use of the fund under the bylaws and meetings.

How We Approach It

1. Period and administration

   Defining the period and each administration examined.

2. Documents

   Trial balances, bank statements, monthly account files and minutes.

3. Reconciliation and testing

   Comparing payments, contracts and approvals.

4. Report

   Findings, balances determined and unsupported amounts.

SGEx methodology stages →

What we examine

Bylaws and internal rules, minutes of owners’ meetings, trial balances and monthly account files, bank statements, contracts with management companies and suppliers, invoices, quotes and construction measurements.

Possible Deliverables

The format is defined according to the agreed scope and the purpose of the work.

• Audit report
• Accounts review
• Construction financial audit
• Expert report
• Technical opinion
• Report for presentation to the owners’ meeting