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Monday September 29 2025

Syndicate’s attestation: How to limit the risks associated with interim financial information?

The certification requires the provision of certain information, including some interim financial information, as of the date of certification, in particular:

Total amount of the contingency fund
Total amount of cash available to pay current expenses
Amount of the self-insurance fund

A CHALLENGE FOR CPAs ?

Certifying interim financial information raises concerns, particularly for directors who hold the CPA designation, as it could potentially conflict with their ethical obligations. The Ordre des comptables professionnels agréés du Québec is currently reviewing this issue and its implications.

Indeed, any certification updated during the fiscal year and based on financial information from interim financial statements that have not undergone any closing process, complete bank reconciliation, or independent corroboration or validation in accordance with the professional practices prescribed by the Ordre des comptables professionnels agréés du Québec, must be interpreted with caution and reserve when making any economic decisions.

The financial information presented could differ significantly if certain transactions were subsequently corrected to reflect differences or changes in interpretation regarding their recognition (e.g., an expense recognized in the contingency fund during the fiscal year may need to be recognized in the administration fund after the year-end review).

In accordance with the conceptual framework for financial reporting, information must be faithful to economic reality, complete, neutral, and free from material misstatement. Although interim figures provide an indication of the situation, potential discrepancies limit the reliability and comparability of the information until a final bank reconciliation and closing procedures have been completed.

For the time being, any director who holds the CPA designation should refrain from signing an attestation until the Ordre des comptables professionnels agréés du Québec has provided specific guidance in this regard.

THE CHALLENGE FOR SYNDICATES

While interim financial data may pose a challenge for CPAs who have not performed validation work, the risks of liability are the same for anyone who provides financial information that could potentially be misleading, particularly to the buyer.

Disputes often arise from frustration on the part of a party who feels aggrieved when unexpected special contributions arise.

We therefore encourage syndicates to be vigilant in accounting for transactions that affect the contingency fund, but more specifically the self-insurance fund.

We also urge syndicates to exercise the utmost caution in their assessment of accounts receivable for claims and encourage them to record a “allowance for doubtful accounts” when there is doubt about the syndicate’s ability to recover amounts or when the legal steps required to assert the syndicate’s rights make recovery of the amounts uncertain.

Although the syndicate is not expected to predict the future, it would be wise to take a cautious approach when analyzing factors or circumstances that could adversely affect the self-insurance fund.

Finally, explaining the risks associated with interim financial information in your certification to inform the reader would be an additional precautionary measure.

SPECIFIC ISSUES RELATED TO LIQUIDITY

The definition of liquidity can vary depending on the context. In accounting terms, cash includes all assets that become liquid in the short term, i.e., cash on hand (bank liquidity adjusted for outstanding deposits and payments), certain investments, and accounts receivable.

That said, readers of a attestation may be more interested in the cash immediately available for day-to-day transactions, in which case cash on hand should be considered. However, this cash on hand should be adjusted for obligations owed to other funds, such as the contingency fund and the self-insurance fund (inter-fund obligations).

In addition, cash should always be considered in relation to the syndicate’s short-term obligations (liabilities), i.e., accounts payable and other short-term liabilities. A syndicates cash and short-term liabilities can vary significantly over time, as a syndicate constantly receives invoices to pay and issues payments, even within the same day.

Thus, the cash data appearing in an attestation and derived from internal financial statements may differ from that appearing directly on the condominium’s bank statement for several reasons (non-exhaustive list):

Interfund transactions

In an earmarked fund accounting system, certain transactions may give rise to transfer entries between funds (e.g., between the administration fund, the contingency fund, or other dedicated funds). Any inter-fund amounts owed by the administration fund to another dedicated fund should be adjusted against the administration fund’s cash balance, since short-term transfers can be made to these dedicated funds at any time.

Transactions completed but not yet recorded in the books

Banking transactions, such as preauthorized automatic payments for bill payments, deposits in transit, or interfund transfers that have not yet been recorded, may have taken place but not yet been entered in the accounting records. These recording delays create temporary differences between the balance shown by the bank and the balance shown in the internal financial statements.

Interim nature of the information

The cash balance presented is derived from interim financial statements that have not been subject to any closing process, complete bank reconciliation, or independent corroboration or verification. As a result, the amounts presented may differ significantly from those that would result from a formal closing and corroboration and validation work in accordance with professional practices prescribed by the Ordre des comptables professionnels agréés du Québec.

WHAT CAN BE DONE TO AVOID PROBLEMS ?

To avoid issues related to misinterpretation of the syndicate’s cash flow, here are some recommandations :

In your attestation, we recommend outlining the risks associated with the interim financial information in order to provide full transparency to the reader.
To avoid any misunderstanding regarding liquidity, we recommend specifying the type of liquidity presented (e.g., bank liquidity or cash on hand).
We also advise attaching your interim financial statements to the attestation, allowing the reader to evaluate liquidity within its overall financial context.

This will prevent confusion and misinterpretation of this information.

Elise Beauchesne, CPA, Adm.A
President and CEO
SolutionCondo