Fund Accounting

Fund Accounting

Because a condominium or strata 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 allowed under generally accepted accounting principles. The Restricted Fund Method, and the Deferral Method.

These methods really have to do with the way that contributions (donations) are accounted for.  And in a condominium, or strata  the result of the accounting under both methods is really no different, since there are no "donations" that need to be deferred. But generally, we like to say that we are using the restricted fund method.