It is not uncommon for homeowners to wonder where all their dues are going. Some owners might see their dues go up with no visible changes to the property and even get suspicious. Of course, associations often bear a lot of expenses that are not directly related to property condition, such as insurance, management, and legal fees. Nevertheless, owners have the right to know what their association is doing with their assessments.
If a homeowner wants to know where the money is, he or she should first request the association’s annual financial statements. These statements are an association record, and the owner has a right to view them. The Colorado legislature intends that these statements be available at no cost to the owner, so it is advisable for associations to keep them readily available in an electronic format.
If the annual financials do not satisfy the owner, an audit or review may be an option. Audits are performed at the discretion of the board, but members are empowered to demand audits in limited circumstances. If the association has annual revenues or expenditures of at least $250,000.00 and at least one-third of the owners request the audit, the Association must obtain an audit using generally accepted auditing standards, performed by a certified public accountant. If the Association has revenues or expenditures below $250,000.00, a third of the owners are entitled to demand a review, rather than an audit.
Audits are expensive, and if you find yourself in a situation where owners are requesting an audit or review, listen to the request. There is a reason for the dissatisfaction, and if the association has properly conducted business, the audit or review will support the board’s conduct.