The condominium statement of financial position explained

The condominium statement of financial position is the snapshot of the accounting balances at year end: how much is left in petty cash and in the bank account, what receivables the building holds against owners in arrears and what payables it still owes to suppliers. Together with the accounting register and the explanatory note, the condominium statement of financial position makes up the annual report the administrator submits to the owners' meeting. Here is what it contains, what the Italian Civil Code requires and how to read it.

What the condominium statement of financial position means

While the accounting register lists the year's transactions in chronological order, the statement of financial position looks not at the flow but at the state of things: on a single page it sums up what the building owns and what it owes as at the closing date. It is the part of the report that reveals, beyond how much was spent, the real financial health of the building at the moment the owners' meeting is asked to approve the accounts.

The legal basis: article 1130 bis of the Civil Code

Article 1130 bis of the Italian Civil Code, introduced by the 2012 condominium reform (law 220/2012), provides that the report contains the income and expense items and any other data relating to the building's financial position, available funds and any reserves, expressed so as to allow immediate verification. The rule specifies that the report is made up of an accounting register, a financial summary and an explanatory note on the management, indicating ongoing relationships and pending matters.

Assets: liquid funds and receivables

On the assets side the statement reports what the building has available. The recurring items are the cash on hand, the balance of the condominium bank account (mandatory by law) and the receivables from owners who have not yet paid their instalments for the year. Receivables from third parties should also be shown, such as expected insurance refunds or adjustments in the building's favour not yet collected.

Liabilities: payables, funds and reserves

On the liabilities side you find payables to suppliers for invoices received but not yet paid, any amounts owed to the administrator for advances, accrued funds and reserves. The special fund for extraordinary works required by article 1135 of the Civil Code deserves attention, as it must be kept separate from ordinary management: mixing it with current cash is one of the mistakes that make the accounts hard to read.

Statement of financial position and financial summary

In the language of Italian condominium reports the statement of financial position largely coincides with the financial summary required by article 1130 bis. The document relates the cash received and spent to the commitments still open, that is the expenses accrued in the year but not yet settled. This gives rise to the so called mixed cash and accrual system, which case law considers necessary for a verifiable report: cash alone cannot capture the building's position.

How to read and verify it

To verify the statement of financial position you start from the balancing: the difference between assets and liabilities must match the funds actually available. The cash and bank balance shown must coincide with the real bank statement at the closing date. Receivables from owners in arrears should be compared with the instalment schedule, while payables to suppliers should be checked against the attached invoices. Owners may at any time inspect the supporting documents and obtain copies.

• Compare the bank account balance with the bank statement at closing.
• Check receivables from owners against the instalment schedule.
• Verify payables to suppliers against invoices not yet paid.
• Ensure the extraordinary works fund stays separate from ordinary cash.

The most common mistakes

The mistakes that most often make the statement contestable are the failure to separate the extraordinary fund from ordinary management, carrying forward receivables from arrears that are now uncollectible without any note, and a discrepancy between the declared balance and the real bank balance. An unclear statement of financial position complicates the recovery of arrears and can expose the administrator to a challenge against the resolution approving the accounts.

The statement with management software

With management software the statement of financial position updates in real time from the movements already recorded: bank reconciliation aligns the account balance with the real statement, the instalment schedule keeps receivables from arrears under control and the extraordinary fund stays separate from ordinary cash without manual work. In this way the balance between assets and liabilities is always available, not only at year end.

AmministraPro builds the statement of financial position in line with article 1130 bis from the firm's accounting, with receivables, payables and funds always aligned to the bank. You can see how it works on the features page or compare the plans in the pricing section.