Fund Accounting

Because a condominium must establish a reserve fund, we must use fund accounting.

What is Fund Accounting?

It is like presenting two set of financial statements. One for the operating fund, and one for the reserve fund. Each fund is a "self-balancing" set of accounts. Each has its own revenues, expenses, assets, and liabilities.

There are two types of fund accounting described for contributions, the Restricted Fund Method, and the Deferral Method.

But a Condominium does not receive donations. It is more like a government entity. In 2013, the Accounting, Auditing and Tax Guidelines for Ontario Condominium Corporations of the Ontario CPA Institute concluded that "owners’ assessments do not meet the Handbook definition of “contributions”, the deferral or restricted fund method of accounting for contributions is not relevant to condominiums and it is not appropriate for the notes to financial statements to refer to these accounting principles" (page 16).