Associations that are governed by the Minnesota Common Interest Ownership Act (MCIOA) are required to conduct a review of the financial statements at the end of every fiscal year. Minn. Stat. §515B.3-121 requires that all associations hire an independent licensed CPA to review the association’s financial statements. This is the minimum requirement, and additional requirements may be included in the association’s Declaration.
The Statute requires a review of the association records, not an audit. An audit is much more in depth and costly than a review. While both processes will give the association assurances that the financial statements are correct, an audit will delve deeper into every transaction to assure no irregularities exist. For most associations a review is sufficient.
This requirement may be waived by an affirmative vote of at least 30 percent of the votes in the association. The votes can be obtained via a mail vote or at a meeting. It is important to note that the 30 percent threshold is not 30 percent of those who came to the meeting or responded to the mailed ballot. The affirmative vote must equal or exceed 30 percent of all the votes in the association. This vote must be taken within 60 days of the end of the fiscal year. However, even if the members of the association vote to waive the requirement to perform the review, the board still retains the power to cause a review or audit to be made.
While many associations have their records reviewed annually, some opt for a review every other year, or even once every three years. It should be noted that if your association wants to review the records only once every three years, a vote must be taken every year to postpone the review – you can not vote in 2012 to wait until 2014.
Associations that are not governed by MCIOA should review their governing documents to determine any financial statement review or audit requirements.