Budgets are very important in condominium management.
1. Budgets are the basis for the condominium or strata fee assessment.
2. Budgets provide comparative information for the assessment of projected cash flows.
3. The review of the budget is a key control to prevent and detent fraud or error.
- the review of budgeted revenues against actual revenue can provided evidence of accounting errors or misappropriated funds
- the review of budgeted expenses against actual can provide evidence of accrual and classification errors, or unauthorized spending.
Budgets should be made both for expected operating and capital expenditures, and if relevant, any capital additions.
In BC, all expenditures must be first approved by the budget, otherwise it is an "unapproved expenditure." Unapproved expenditures are limited to the greater of 5% of total strata fees, or $2,000.