Which statement must be included in financial statements?

The inclusion of a statement confirming that reserve funds have not been used to fund operations in financial statements is important for a number of reasons. Reserve funds are typically set aside for specific future expenses, such as maintenance and capital improvements, and not for day-to-day operational costs. By including this statement, it provides clarity and transparency about the financial health and responsible management of those funds within a community association.

This statement helps ensure that stakeholders, including homeowners and potential buyers, are aware that the community's financial operations are being managed in accordance with sound practices. It also indicates that the community is proactively maintaining its financial stability by not relying on reserves to cover operating deficits, which can lead to long-term financial issues. This strengthens the accountability of the community manager and the board, highlighting their commitment to fiscal prudence.