The depreciation report for your strata corporation will be fully compliant with the Strata Property Act and Regulations. It will contain both of the following key sections.
Complete physical inventory & analysis
The purpose of the physical analysis is to confirm what the property consists of and its current condition, plus note all expected repair or replacement dates. In part, the report is a complete physical component inventory of all shared parts of the property, including the building enclosure (roof, walls, windows), building structure, and any interior systems like plumbing, HVAC and fire safety. Any assets that belong to the Strata outside of the main building are also included. The physical analysis portion of the depreciation report includes things like:
- Records of the year of acquisition/construction of all assets, noting present age and life expectancy
- A complete review to confirm building condition by our engineers and technicians, noting if wear and tear is in line with the expected condition
- Assessment of the remaining life expectancy, including adjustments for condition, factoring in any repair and anticipated maintenance work
- Projected year for repair or replacement for each asset and estimated costs
It requires a number of legal documents to be provided by the strata corporation, including any official drawings for the property, prior investigation reports, and any existing maintenance and inspection reports.
Financial analysis & plan
The financial analysis section of the depreciation report is designed to look at your strata’s projected expenses, examine how much money you have, determine how much money you need, outline possible ways to fund the needed work, and make recommendations.
A proper financial analysis starts with the opening balance of the fund, finishes with the closing balance, and includes cash flow projections for up to 60 years in the future if needed:
- The expected future maintenance, repair and replacement costs for everything in the inventory, including common property and assets
- Explanation of all factors used to calculate these costs. For example, we use published construction price indexes for the area your strata is located in for greater accuracy
- An assessment as to whether or not the contingency reserve fund (CRF) will meet all future needs, noting the amount of any shortfall or overage. If there is a shortfall, options for loans, operating transfers, borrowing proceeds, or special levies are itemized
- Confirmation of the recommended contributions for each owner for each fiscal period. We generally recommend a rate designed to reach parity with the increase in the consumer price index as soon as possible
- Estimated interest earnings, usually based on the average of the opening and closing balances for short-, medium-, and long-term GIC rates
Within the depreciation report, we provide options for at least three funding models and a recommendation as to how to best meet your strata corporation’s needs. Please keep in mind that in BC, strata corporations must have a contingency reserve fund that equals a minimum of 25% of the operating fund for one year (or a plan to make up the difference). As one of Canada’s most reputable reserve fund study providers, Egis is here to support you if you need assistance.
Providing a plan of this scope and detail requires access to strata documents like the operating budget, balance sheet, ledgers, invoices, and any insurance certificates.
Legal documents like service agreements, reciprocal easements, leases, strata bylaws and strata plans are also needed to provide a complete background.
