How to prepare a compliant condominium financial statement

The three documents required under Article 1130 bis

Article 1130 bis of the Italian Civil Code, introduced by the condominium law reform, establishes that the financial statement is made up of three distinct and complementary parts, not interchangeable with one another.

The accounting ledger records every inflow and outflow in chronological order, with description, amount and date: it is the analytical base from which the other two documents are derived. The financial summary presents the condominium's balance sheet position, cash on hand, receivables from owners in arrears and payables to suppliers, giving a snapshot of the financial health at year end. The explanatory note is the document most often neglected: it must clarify, in plain language, the variances between budgeted and actual spending, line by line.

• Accounting ledger: chronological, analytical, with description and date for every movement
• Financial summary: cash, receivables from owners in arrears, payables to suppliers
• Explanatory note: variances between budget and actual spending explained clearly

How to organize the accounting ledger throughout the year

The accounting ledger is not written at year end: it is the result of recording each movement precisely at the moment it happens. Every supplier payment, every installment collected, every bank transfer must enter the ledger with a clear description and a reference to the correct expense category, so that at year end the financial statement is generated by aggregating data already in place, not by reconstructing it after the fact.

Keeping movements separated by fund, ordinary management, extraordinary works reserve, any separate management accounts, prevents expenses of a different nature from mixing in the same account, a mistake that makes the financial summary hard to read and more exposed to challenges at the assembly.

The explanatory note: what it must actually contain

The explanatory note is not a generic summary: it must justify significant variances between the budget approved at the start of the year and the expenses actually incurred, giving the reasons, an unforeseen urgent repair, a supplier's price increase, a delay in collecting installments, for each expense category where the variance is material.

A well written note drastically reduces questions and objections during the assembly, because it anticipates the explanations owners would otherwise ask for one by one while the statement is being discussed.

How management software generates the statement automatically

A condominium management platform such as AmministraPro records every cash movement, installment collection and supplier payment at the moment it occurs, linking it to the correct expense category and the correct allocation share. At year end the accounting ledger, the financial summary and a draft of the explanatory note are generated automatically from that data, with category totals already compared against the approved budget.

This does not replace the property manager's work on the explanatory note, which still requires professional judgment about the reasons behind the variances, but it removes the longest and most error prone phase, manually reconstructing movements at year end, and lets the manager check the state of the accounts at any point during the year, not only at closing.

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