The board of the small Upper West Side co-op settled in for the annual meeting. It was supposed to be nothing unusual. Sure, they needed to rally shareholders to vote "yes" on a flip-tax proposal, but the board thought there was enough support for that. When it came time to distribute the required annual, audited financial statement, however, there was nothing to distribute.

What? That's like trying to start a car without a motor. How could it happen?

In this case, the accountant screwed up and let his work on the statement fall through the cracks. And the board's new treasurer screwed up by not raising a red flag in time. The fallout? "A shareholder came up with some seat-of-the-pants calculations that would have been unrealistic in terms of income," says the board vice president, "but because she had figures on paper, they carried more weight than they should have." Fortunately for this board, it was able to postpone the vote until it got an unaudited draft statement a couple of months later, and the flip-tax proposal then passed.

This Robert's Rules of Horror story illustrates the importance of having your financial statement in on time, but it also addresses something broader: the need for your residents to not only get the figures but to "get" the figures.

Bad Boards, Bad Boards – What'cha Gonna Do?

Sometimes, however, boards think, "We've been elected to run this building, so let us run it." They don't want apartment-owners "bothering" them with questions – even if those questions might be helpful, since a board of real-estate laypeople can't know everything about managing a building's finances.

Less ethically, too, some boards deliberately use accounting figures to obscure their mistakes or misdeeds. And, sometimes, board-members themselves simply may not understand the intricacies of reading and explaining financial statements.

Yet ensuring that your constituency can understand the annual statement makes sense. First, transparency builds trust and credibility, allowing boards to make decisions with more support from residents than do boards that are second-guessed and have their competence questioned. It also helps fulfill the checks-and-balances function that responsible organizations need, and gives the board extra eyes and ears to help spot potential problems.

"When you make shareholders more proactive, they have better questions, and they can ask of management, ‘What is this item, is this unusual?' and so on," says Bob Sardis, founder of the 10-year-old finance-information website MoneyChimp.com. "Raising everybody's knowledge improves the dialogue, and everybody would be speaking the same language – a business language."

Once you've decided to educate your constituents on how to decipher the annual financial statement, how do you go about it?