Tag: financial reporting

Our bylaws, especially our Spending Bylaw #90 describe how the Board of Directors must inform members about co-op finances.

(A) Operating Budget and setting housing charges

Each year, the board must prepare an operating budget for the next fiscal year and present it to the members for approval at a general meeting.
(Occupancy Bylaw, Article 4)

The operating budget must include:
– the total estimated cost of operating the co-op
– a detailed breakdown of costs by category
– the proposed monthly housing charges for each unit or type of unit
– the proposed fees for services charged separately, such as parking (Occupancy Bylaw, Article 4.2)

(B) Reporting to members

The board will provide the members with a summary of the operating budget with actual expenditures and income based on the six month financial report. The report will be provided to members in writing by mid-March.

(i)  Significant un-budgeted expenses (greater than 1% (one percent) of the TMHC (Total Market Housing Charges) must be reported by the board to the members.
(Spending Bylaw Article 8.2)

(ii)  Un-budgeted emergency expenses

Emergency expenses are immediate costs the Co-op must pay to prevent property damage, protect people or property, or maintain essential services such as power, heat, hot water, or cooking.
The board is authorized to approve un-budgeted emergency expenses without member approval and may delegate this authority to staff or other designated persons.

All un-budgeted emergency expenses must be reported by Management to the Board and disclosed to the members in accordance with Article 8.2 of the bylaw.
(Spending Bylaw Article 9)

(iii) Change in housing charges

If the board feels that there should be a change in the total operating expenses and/or housing charges during a fiscal year, it must call a members’ meeting (in accordance with the Occupancy By-law Article 4.5) to consider the change. (Spending Bylaw, Article 4 (d)

(iv) Member approval needed for major commitments, major agreements, authority to spend borrowed money

Major commitments including borrowing must follow the Organizational Bylaw Article 24.1 -24.2. Certain actions can only be taken by the board of directors on behalf of the co-op, but only if they have been authorized by the members.

Members must approve major agreements that involve charges for items that were not included in the most recent approved budget(s) and entering into any agreements or commitments with a term of ten years or more, or where the other party can renew the term so the total is more than ten years.

Authority to spend when borrowing money
Members vote to approve borrowing funds. They must also vote on a separate motion which authorizes the board to spend the borrowed money.(Spending Bylaw, Article 6)

(v) Authority to spend by committees

The Board may also delegate spending authority to a committee for budgeted expenses. However purchases and contracts over one thousand dollars ($1000) must be approved by the Board and bids and contracts must be administered by Management.
(Spending Bylaw, Article 3 (c))

(C) Choosing a bid or quote

The Spending Bylaw has a list of criteria.
The board or other person authorized by the board does not have to choose the lowest quote or bid. They may choose another for reasons such as quality, experience and timing. If they do not choose the lowest bid, they must document the reasons for their choice in the open minutes of the board meeting.
(Spending Bylaw, Article 11.6)

(D)  Donations

The Donation Policy says the Board of Directors will disclose annually the full amount of donations made in the financial year, together with the names of the recipient charities and the amount awarded to each charity in a report prepared at the same time as the annual audited statement.

(E) Reporting to members – Interest on savings

Ninety five (95) percent of any income earned on the co-op’s cash and investments shall be allocated to replacement reserves. The other five percent shall be allocated to operations.
This ratio roughly represents the ratio of our combined replacement reserves to accumulated surplus. The Board can override this ratio but must report this to members as part of the budget process.
(Spending Bylaw, Article 7)

(F) Changes in management or staffing contracts

The Board has the authority to amend the management contract or staffing at any point in the fiscal year. If the amendment causes a change in total operating expenses and / or housing charges during a fiscal year, it must call a members’ meeting.
(Spending Bylaw, Article 4.1 (d)

The Organizational Bylaw, Article 18.7 makes conditions on contracts with a Management or Service Company Employee. And Occupancy Bylaw has rules in Article 17.4. Co-op Employees.

Where to find more information:

See Spending Bylaw

See Annual budgets, housing charges and reserves