The Michigan Condominium Act was amended in 2014 to impose additional requirements on condominium associations with respect to financial record keeping and encourage transparency. Prior to 2014, the annual audit or review of an association’s books, records and financial statements did not need to be certified. After MCL 559.157 was passed, and became effective in 2014, a condominium association with annual revenues in excess of $20,000.00 was required to have its financial statements independently audited or reviewed by a certified public accountant. A condominium association may opt out of having a CPA perform an audit or review of the books, records and financial statements if a majority of the co-owners approve not having the CPA perform the audit or review. Accordingly, every condominium association should ensure that a CPA is performing an audit or review of the association’s financials for 2014 when preparing the year-end financial statement, unless the association opted out. The text of MCL 559.157 is below.
MCL 559.157 Books, records, contracts, and financial statements; examination; audit or review; opt-out of requirements of subsection (2).
(1) The books, records, contracts, and financial statements concerning the administration and operation of the condominium project shall be available for examination by any of the co-owners and their mortgagees at convenient times.
(2) Except as provided in subsection (3), an association of co-owners with annual revenues greater than $20,000.00 shall on an annual basis have its books, records, and financial statements independently audited or reviewed by a certified public accountant, as defined in section 720 of the occupational code, 1980 PA 299, MCL 339.720. The audit or review shall be performed in accordance with the statements on auditing standards or the statements on standards for accounting and review services, respectively, of the American institute of certified public accountants.
(3) An association of co-owners may opt out of the requirements of subsection (2) on an annual basis by an affirmative vote of a majority of its members by any means permitted under the association’s bylaws.
Kevin Hirzel is a partner at Cummings, McClorey, Davis & Acho, P.L.C. He frequently represents Builders, Community Associations, Condominium Associations, Cooperatives, Co-Owners, Developers, Homeowner Associations, Investors, Property Owners and Property Managers throughout the State of Michigan. Mr. Hirzel can be contacted at (734) 261-2400 or email@example.com. Please view The Michigan Community Association Law Blog athttp://www.micondolaw.com for additional resources on Michigan Community Association Law.