Strata managers have a lot of responsibilities, one of which is financial reporting. Financial reporting is the process of documenting and summarizing a company's financial performance and position. This can be done in different ways, but most strata managers will use an annual financial statement.
Both internal and external stakeholders can use this document summarizing a company's finances to make decisions about the company. In this post, we'll discuss what goes into an annual financial statement for a strata company, how stakeholders can use it, and the role of strata management in financial reporting.
An annual financial statement should include the following:
The cash flow statement is one of the most important parts of any annual financial statement for better financial management. It shows how much cash is generated and used by a strata company. Some of the most important items included in the cash flow statement are:
Strata managers need to know how stakeholders can use their annual financial statements. Since it summarizes the company's financial performance and position, the annual financial statement:
Enables internal stakeholders to make decisions about the company - This includes determining how profitable a strata company was during the year and generating ideas for improving it. It also allows stakeholders to determine whether the company is over or under-performing, which can help ensure better financial management.
Enables external stakeholders to make decisions about the company - For example, investors can use a strata manager's annual financial statement to determine whether or not they should invest in the company.
It's clear why the annual financial statement is so important for strata managers and stakeholders alike. By knowing what to include in an annual financial statement and how it can be used, strata managers can make the most of this document.
Financial reporting can be a challenge for some strata managers, as there are so many changes and amendments to keep track of. One of the biggest challenges involves keeping track of changes that are made to the strata bylaws. If any changes are made, these need to be reflected in the financial statements. This includes any changes to the number of storeys in a multi-storey strata building, which may affect its value and operations.
Another challenge is keeping track of the changes to the financial statements. For example, if a strata manager calculates depreciation and amortization for its first year of operations, this figure needs to be updated every year thereafter. That way, the depreciation and amortization amount is always reflective of the strata company's operations.
During financial reporting, it's important for strata managers to appropriately reflect changes that are made during the year. This will help them create accurate and reliable annual financial statements. If any changes need to be made, strata managers should contact their accountants for help and advice on how to reflect these changes.