Strata Companies and Variable Outgoings
Strata Companies Audit Requirement
Although there is no requirement in the Act or the default by-laws for the books or statement of accounts to be formally audited, there are a number of reasons why a strata company would benefit from financial records being audited:
- an audit of the financial records of the strata ensures greater accountability to the owners;
- the audit gives assurance that all funds received by the strata company have been correctly collected, documented and banked. It shows all monies spent by the strata company were for the purpose of the strata company, approved by strata management, and documented. This also helps to protect strata company management against unfounded allegations of misconduct; and
- the audit functions as a check and balance. It requires that the financial records of the strata company be kept to a standard in order for the audit to occur and will indicate areas that may require improvement.
Strata Companies Audit Process
During an audit, we establish whether the funds received by the strata were appropriately used for the benefit of the owners and are supported by valid invoices. We further agree reconciliations to the bank accounts of the strata to ensure the available funds do in fact exist.
Variable Outgoings Audit Requirement
Under the Commercial Tenancy (Retail Shops) Agreements Act 1985, the Lessor is obliged to comply with audit and accounting standards and timetables for preparing budgets, providing end of financial year expenditure statements and distributing audit costs particularly on net rental agreements. The Lessor is also required to supply tenants with an audited operating expenses statement within 3 months after the previous accounting period has ended. If this is not done, tenants do not have to contribute to the Lessor’s operating expenses until they have received the audited statement.
Variable Outgoings Audit Process
During the audit, actual expenses incurred are agreed to valid invoices from suppliers, considered to verify whether it is a Lessor or Tenant expense and for the correct premises and compared to budget.
We audit over 40 VO audits annually.
