Our clients have asked when they should start preparing for the update report – essentially when is 3 years up?
There are several dates associated with a Depreciation Report: the date of the site visit, the date the draft report was issued, and the date the final report was issued. There may be as many as 6 to 8 months between the site visit and final report.
The site visit is used to establish the current condition of the assets and is the basis for forecasted renewals and maintenance. If the Strata Corporation plans for the site visits to be approximately 3 years apart, then the timing of the draft and final updates should follow approximately 3 years after the initial study.
If Strata Corporations need to include an allowance for a Depreciation Report Update in their annual budget for approval at their AGM, then most Strata Corporations will need to begin planning for the update more than a full calendar year before the 3-year anniversary of the final report.
Depreciation Report Update Timeline
The graphic above shows one way of planning for the update. It assumes that the fiscal year end falls on December 31 and the site visit for the first Depreciation Report happened in late summer of 2012. The fiscal year for many Strata Corporations will not align with the calendar year. The timeline should be updated based on your fiscal year. Here’s a brief overview:
- In order to prepare the annual budget, the Strata Corporation asks for a proposal roughly two months before the date of their AGM.
- The council prepares the proposed budget for 2015 (which includes the proposal for the update) for approval at the AGM.
- The budget is approved at the AGM.
- The Strata Council accepts the proposal from the Depreciation Report provider.
- The provider schedules the site visit for the summer of 2015.
- The Draft version of the report is issued for the council to review and comment on.
- The Final version of the Updated Depreciation Report is issued.
To start the planning process, look at the current Depreciation Report and determine when the site visit took place. (If the date is not clearly listed, contact the company who provided the initial Depreciation Report.)
The 3-year anniversary of the site visit will help you determine which fiscal year your update study will occur and when to obtain a proposal. If the date of the site visit is within 2 to 3 months of your AGM, you may need to approve a Depreciation Report Update before your AGM. Talk to your Strata Manager for options if this is the case.
At RDH, we’ve completed over 1000 depreciation reports over the past three years. Our reports deliver realistic forecasts and actionable solutions, written in a way that’s clear and easy to understand. Click here to request a free depreciation report proposal.