Comparison
Cash Basis or Accrual Basis: How the Financial Statement Changes
A condominium financial statement can capture the year of management with two different logics: the cash basis records only what was actually collected and paid, while the accrual basis attributes costs and revenues to the year they relate to, regardless of when the money moves. Article 1130-bis of the Italian Civil Code requires the statement to contain both the cash figures and the balance sheet with credits and debts, so in practice the two criteria do not exclude each other but combine. This comparison explains what each criterion records, where the concrete differences arise, and how to read them without confusing the account balance with the real result of the year.
Compared
| Criterion | Cash basis | Accrual basis |
|---|---|---|
| What it records | Only revenue collected and expenses paid during the year | Costs and revenues of the period, even if not yet settled |
| Unpaid year-end invoices | Stay out until the money leaves the account | Appear as a debt to the supplier for the period |
| Instalments not paid by owners | Do not show, the account simply shows less income | Appear as a credit of the condominium toward the arrears |
| What the result measures | The change in available liquidity | The real cost of managing the year |
| Risk of misreading | A full account can hide debts not yet paid | An explanatory note is needed to link balances to movements |
What Article 1130-bis of the Italian Civil Code says
The rule does not allow freely choosing only one of the two criteria: it requires the statement to consist of an accounting register, a financial summary, and a concise explanatory note, and to include ongoing relationships and pending matters. In concrete terms this means that alongside the cash movements the balance sheet must appear, that is, credits toward owners in arrears and debts toward suppliers not yet settled.
For this reason the condominium financial statement is typically a hybrid: the financial part follows the cash basis, while the balance sheet introduces accrual elements. Talking about cash or accrual, therefore, does not mean adopting a single method, but understanding which of the two readings you are looking at in a given part of the document.
The cash basis: what it shows and what it hides
With the cash basis the statement records a cost only when money leaves the account and revenue only when it arrives. It is immediate to verify, because every line corresponds to a real bank or cash movement, and this makes it transparent for owners who compare the bank statement with the register.
The limit is that the account balance can mislead. If unpaid invoices remain at year-end, the cash appears larger than it really is: that money is already committed. Likewise, unpaid instalments do not appear as missing expenses, but they are a shortfall someone will have to cover. Read on its own, the cash basis captures liquidity, not the cost of the year.
The accrual basis: the real cost of the period
The accrual basis attributes each cost to the year the service was rendered, regardless of payment. The December heating bill paid in January belongs to the year the heat was consumed, not to the one in which the transfer leaves. This criterion measures how much management really cost, and it is the correct basis for comparing two years with each other.
Accrual is essential for a fair split among owners who change during the year. Whoever sells the apartment mid-period must answer for the costs accrued up to the sale, not for those actually paid afterward. Without the accrual basis, a simple shift of dates would move the burden onto the wrong buyer.
Where the practical differences arise
Divergences between the two criteria always concentrate at the boundary between two periods. These are accruals and deferrals: costs belonging to the year but paid later, or advance payments that also cover the following year. A maintenance contract paid in a single instalment in September but valid for twelve months must be split between the two periods if you reason on an accrual basis.
Special funds for extraordinary works also show the difference: owners' contributions may arrive in one year while the expense materializes in the next. Cash records the income immediately, accrual keeps the money as committed to the resolved work. Confusing the two levels is the most common cause of statements disputed at the owners' meeting.
How to read cash and accrual together
The correct reading starts from the cash balance and integrates it with the balance sheet. From the available money you subtract debts to suppliers and add credits toward owners in arrears: only then do you understand the real position of the condominium. The explanatory note required by the rule serves precisely to link these elements in an understandable way.
A well-built statement presents both views without forcing the owner to redo the math. A management platform such as AmministraPro keeps cash movements and balance sheet positions aligned throughout the year, so credits and debts stay updated and reconciliation is not a last-day exercise. The accounting features are described on the /funzioni page and the plans on the /prezzi page.
Frequently asked questions
Must the condominium statement be cash basis or accrual basis?
It must not be only one of the two. Article 1130-bis of the Italian Civil Code requires the financial summary, typically cash based, together with the balance sheet showing credits and debts, which is an accrual element. The correct statement integrates both readings in one document accompanied by the explanatory note.
Why is the account balance not enough to judge management?
Because a full account can hide invoices not yet paid, while a low account can depend on instalments not paid by owners. The cash basis alone measures liquidity, not the real cost of the year. The balance sheet is needed to correct this partial reading.
What are accruals and deferrals in a condominium statement?
They are the entries that link two periods. An accrual is a cost belonging to the year but paid later, a deferral is an advance payment that also covers the following year. They serve to correctly split costs such as annual maintenance contracts or insurance policies straddling two periods.
Does the accrual basis matter when an owner sells the apartment?
Yes. With accrual the costs accrued up to the sale stay with the seller, while later ones pass to the buyer. Reasoning only on cash would shift the burden based on the payment date, not the date the service was rendered, generating unfair splits.
Can software manage both criteria at the same time?
Yes. A management platform updates cash movements and, in parallel, credit and debt positions, so the balance sheet is always consistent with payments. This avoids rebuilding credits and debts only at year-end and reduces disputes when the statement is approved.
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