Practical guide
How to close the condominium financial year
Closing the condominium financial year is not just about adding up income and expenses for the year: it is a process built on careful checks, reconciliation between the bank account and the accounting ledger, allocation of expenses according to the correct ownership shares, and drafting the financial statement in the form required by article 1130 bis of the Italian Civil Code. A mistake in any of these steps carries over into the following year and often surfaces at the assembly as a formal objection. This guide walks through the operational sequence a property manager should follow before calling the approval assembly, from checking cash movements to carrying balances forward into the new year, with attention to the most common pitfalls.
Reconcile cash and the bank account first
The first step, often underestimated, is reconciling the movements recorded in the accounting ledger against the building's bank and postal statements. Every instalment collected, every transfer to a supplier, every bank fee charged must match precisely: even a small unexplained difference undermines the credibility of the entire financial statement in front of the assembly.
At this stage it is also worth checking petty cash, if the building keeps one, and any restricted funds such as the works reserve fund required under article 1135 of the Civil Code for major maintenance works: these funds must not be mixed with ordinary management and should be shown separately in the statement.
Reconciling budget, actuals and ownership shares
Closing the year requires comparing what was budgeted at the start against what was actually spent: significant variances need an explanation, because the assembly must be able to assess whether higher costs stem from unforeseen events, from urgent works under the second paragraph of article 1135, or from an underestimated budget.
It must also be verified that every expense item has been allocated to the correct ownership table: elevator costs follow the specific elevator shares, centralized heating costs follow the heating table where one exists, and general costs follow the general property shares. A wrong allocation produces a challengeable expense split and, if contested in court, a judge can annul the approval resolution.
- Stairwell expenses allocated to general shares instead of stairwell shares
- Individual consumption estimated rather than based on actual meter readings where readings are mandatory
- Advance payments made by individual owners not correctly carried into the final calculation
Expense allocation and the financial statement under article 1130 bis
Article 1130 bis of the Civil Code requires the condominium financial statement to include an accounting ledger, a financial summary and an explanatory note on the management, including ongoing relationships and pending disputes. A simple list of income and expenses is therefore not enough: the explanatory note must make the management understandable even to an owner who did not follow the year closely.
The final allocation distributes among owners the expenses not yet covered by instalments paid during the year, or returns any excess paid: this is the point where balancing payments emerge, positive or negative, which each owner will need to pay or receive after the assembly approves the statement.
Carrying balances forward into the new year
Once the statement is approved, cash balances, receivables from owners in arrears and outstanding payables to suppliers must be carried forward as opening balances for the new year. An imprecise carryforward is one of the most frequent causes of statements that do not reconcile the following year, because the error propagates and compounds.
A condominium management platform like AmministraPro can significantly simplify this phase, automatically tracking movements, generating the statement in the structure required by the law, and carrying balances forward into the new year without manual intervention, reducing the risk of transcription errors from one year to the next.
Frequently asked questions
By when must the condominium financial statement be approved?
The Civil Code does not set a single mandatory deadline, but the property manager must convene the assembly to approve the statement within one hundred eighty days from the close of the financial year, as required by article 1130 number 10 of the Civil Code. Failure to meet this deadline can amount to a serious irregularity under article 1129 and justify the judicial removal of the manager upon request by the owners.
What happens if the assembly does not approve the statement?
If the assembly rejects the statement or fails to reach the quorum needed to approve it, the property manager must supplement or correct it based on the objections raised and resubmit it at a subsequent meeting. Until approval, balancing payments are not enforceable against owners, which can create cash flow tension if the building has already incurred expenses based on the previous year's budget.
How should major maintenance works be handled when closing the year?
Major works approved with a dedicated reserve fund under article 1135 of the Civil Code must be kept separate from ordinary management in the statement, with a distinct schedule showing contributions collected, expenses incurred and any remaining surplus or shortfall still to be covered. Mixing these amounts with ordinary management makes the statement hard to read and can trigger disputes over the applicable ownership shares, which often differ from those used for ordinary management.
Can a building close its financial year without dedicated software?
It is possible using spreadsheets, but the risk of reconciliation errors, allocation on the wrong ownership shares, or an incorrect balance carryforward grows with the complexity of the building. A platform like AmministraPro automates movement reconciliation, generates the statement under article 1130 bis, and carries balances forward, leaving the property manager time for analysis and communication with the owners.
Who can review the financial statement before the assembly?
Every owner has the right to inspect and obtain copies of the accounting documents before the assembly, and in buildings with more than eight participants a reviewer or a condominium council with advisory and oversight functions can be appointed, as provided by article 1130 bis of the Civil Code. This preliminary check reduces the risk of disputes during the assembly.
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