Preparing for the AGM

Keep all your old AGM packages and compare the numbers, line-by-line, going as far back as you can. If possible, it is best to look at financial statements for the previous four to five years.

Watch for major changes to the operating costs. The introduction of individual unit metering for electrical consumption will download 10-15% of the operating costs onto the individual owners so that decrease will affect the operating costs in future years.

What to look for
Here are some things to watch out for.

Fee increases
The increases in condo fees need to keep up with the rate of inflation. Not only do the operating costs, including utilities goes up, but as the buildings age, more has to be put away for future repairs.

Accounts receivables
They are unpaid condo fees, special assessments and charge-backs. Keep a close eye on these numbers to make sure they are not rising from one year to the next.

Ask the auditor if the board has lost the priority on any possible liens.

Accounts payable
This is the unpaid bills. Watch to see if this is growing from one year to the next. If so, ask the auditor what contractors have not been paid.

Also ask the auditor if all the utility bills were paid in full every month and if the monthly bills include penalties because the corporation has not paid all of its previous monthly bills on time.

Bad debts
The Condo Act gives the board the priority on any lien that is registered within 90 days of any unit going into arrears so there should be no bad debts that need to be written off. If there are, then most likely the management company, the board, or both, were not on the ball.

Plumbing and drywall repairs
If the plumbing and drywall repairs are going up ask the board what the problems are. Your building may need the hot water risers replaced and the directors are stalling.

Reserve fund balances
Reserve fund balances may have no connection to reality. Ask the auditor if the actual amount of cash and investments in the reserves accounts equals the stated reserve fund year-end balance and if not, explain the difference.

Shared facilities
If your condo is part of a shared facilities corporation, make sure that your AGM package includes the shared facilities financial statements.

You also want to have been given a copy of the Shared Facilities budget and the Form 15 from the Shared Facilities reserve fund study.

Notes
Compare the auditor's introduction page and his notes to the previous years. If the number of notes and the tone of the language changes, he may be stating that there are some bad news.

Check to see if there is any mention of the board being responsible for internal audit controls. This is fairly normal language in auditor reports that is used to inform the owners that the auditor is not responsible for verifying that there are adequate internal controls. However, if this is new wording that he has not used in the past, the auditor may be indicating that there may be issues.

Understand the priorities

Read the actual reserve fund study to see if the work the engineers say needs to be done is what was actually done. A copy should be in the management office. If the board brags about spending $300,000 renovating the lobby and installing new carpets but the reserve fund study states that the $300,000 should have been spent replacing hot water risers, then the board is more worried about "curb appeal" than in maintaining the building.

If so, it's time to sell. Or at least it's time to buy a couple of plastic water cans.


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