From Financial Disarray to Stability: A CityTowers Turnaround Story

In the dynamic world of condominium management, transitions are inevitable. When a new management company takes over, it’s not uncommon to encounter a range of challenges, particularly when it comes to the financial health of the corporation. This case study examines a recent takeover by CityTowers Property Management Inc. of Toronto Standard Condo Corporation No. 0001, a 22-story high-rise with 238 units located in the bustling downtown core of Mississauga, Ontario. Built 12 years ago, this corporation faced significant financial hurdles that required immediate and strategic intervention.The take over of financial records revealed a concerning lack of proper fund accounting. With only the fiscal year (FY) 2022 audit completed and substantial gaps in financial records, CityTowers’ accounting team was tasked with the critical mission of bringing Toronto Condo Corporation No. 0001’s financials up to date and ensuring compliance with required financial reporting standards. This situation underscores the importance of robust financial management in the condo industry.

The Challenge: Financial Disarray

Upon taking over, CityTowers discovered that the financial records were incomplete and disorganized. The absence of proper fund accounting meant that critical financial information, particularly regarding the Reserve Fund and Capital Assets Fund, was either missing or inaccurate. This posed a significant risk to the financial stability of the corporation and the long-term interests of the unit owners.

CityTowers’ Approach: A Comprehensive Financial Overhaul

Recognizing the urgency and complexity of the situation, CityTowers Property Management Inc. implemented a meticulous and comprehensive financial overhaul. Our team of experienced accounting professionals rolled up their sleeves and began the arduous task of reconstructing and reconciling the financial records.

1. Reserve Fund Restoration:

The Reserve Fund, a crucial component of any condo corporation’s finances, was in dire need of attention. CityTowers initiated the following actions:

• Reinstatement of Transactions: Transactions for FY 2022, 2023, and 2024, including contributions, interest income, bank charges, and reserve expenses, were meticulously reinstated.
• Recording Closing Entries: Closing entries for FY 2022 and 2023 were recorded to ensure accurate financial reporting.
• Transfer of Reserve Expenses: Reserve expenses were accurately transferred into the Reserve Fund, and corresponding “Due to/from Operating/Reserve account” transactions were recorded.
• Balancing the Fund: The Reserve Fund was meticulously balanced for FY 2023 and FY 2024.
• Preparing a Rollforward: A rollforward of the Reserve Fund was prepared based on the FY 2022 Audit Report, providing a clear and comprehensive overview of the fund’s activity.

CityTowers Property Management Inc.’s best practices ensured that every single transaction was accounted for. We take a forensic approach to our accounting to ensure no money is lost or unaccounted for.

2. Capital Assets Fund Management:

The Capital Assets Fund also required significant attention. CityTowers took the following steps:

• Reinstatement of Transactions: Transactions for FY 2022 and 2023, including transfers from the Operating Fund to the Capital Assets Fund for locker purchases, were reinstated.
• Recording Amortization Entries: Amortization entries for FY 2022, 2023, and 2024 were recorded to accurately reflect the depreciation of capital assets.
• Recording Closing Entries: Closing entries for FY 2022 and 2023 were recorded.
• Disclosure in Balance Sheet: The Capital Assets Fund was included and disclosed in the Equity section of the Balance Sheet, ensuring transparency and accuracy.

CityTowers Property Management Inc.’s best practices includes a clear breakdown of all assets and their depreciation. We ensure that the financial statements are easy to understand and follow for all board members.

The Impact: Restoring Financial Stability

Through these dedicated efforts, CityTowers Property Management Inc. successfully brought Toronto Condo Corporation No. 0001’s financials back on track. The reinstatement and reconciliation of the Reserve Fund and Capital Assets Fund provided a clear and accurate picture of the corporation’s financial health. This not only ensured compliance with regulatory requirements but also instilled confidence among unit owners.CityTowers Property Management Inc.’s best practices focus on transparency and accountability. By providing regular and detailed financial reports, we ensure that the condo board and unit owners are always well-informed.

Key Takeaways:

This case study highlights the critical importance of sound financial management in condominium corporations. The challenges faced by Toronto Standard Condo Corporation No. 0001 underscore the need for:

• Accurate Record-Keeping: Maintaining meticulous and up-to-date financial records is essential for transparency and accountability.
• Regular Audits: Conducting regular audits ensures that financial statements are accurate and compliant with regulatory requirements.
• Expert Management: Engaging a professional and experienced property management company like CityTowers Property Management Inc. can make all the difference in ensuring financial stability.

CityTowers Property Management Inc.’s best practices includes working closely with auditors to ensure that all financial statements are accurate and compliant. We understand the importance of a clean audit and work diligently to achieve this.

Conclusion:

The successful turnaround of Toronto Standard Condo Corporation No. 0001’s financials demonstrates CityTowers Property Management Inc.’s commitment to excellence and our expertise in navigating complex financial challenges. By implementing a comprehensive and strategic approach, we were able to restore financial stability and ensure the long-term well-being of the corporation. This case study serves as a testament to the value of professional property management and the importance of sound financial practices in the condo industry.CityTowers Property Management Inc.’s best practices are to always be proactive in financial management. We don’t wait for problems to arise but work diligently to prevent them. Our team is always available to answer questions and provide support to the condo board and unit owners.