Strata Companies and Variable Outgoings
The variable outgoings audits are governed by the relevant Acts in each State. An operating expenses statement that details all expenditure by the landlord in the accounting period needs to be given to the tenant within 3 months after the end of the period.
This statement needs to be accompanied by an audit report by a registered company auditor and state whether or not the operating expenses correctly states the expenditure by the landlord during the accounting period concerned and whether or not the total amount of estimated operating expenses for that period exceeded or were below the total actual expenditure by the landlord during that period.
There are subtle differences as to what is classified as an operating expense in various states.
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.
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We have been using the audit services of AMW to complete our annual AFSL obligations for the last 5 years and would highly recommend their service to all, they are well priced, both practical and reasonable in their approach to small AFSL holders, and efficient at turnaround times.
AMW have been our preferred audit firm for SMSFs and other audits for many years. When I started Aver Group in 2004 we were looking to build a relationship with a like-minded professional auditing firm that understood the needs of Accountants.
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The Principal/Director, B J Thomas, is approachable and is commercially minded. He is very professional and always gives clear advice in a prompt and efficient manner. His work ethic and personality has certainly been passed onto his team members and we have a great business relationship with the whole firm.
In summary, AMW are an impressive team which delivers on their promises and are stand out performers in the Auditing sector
AMW came to us highly recommended and have conducted our last two audits of the college’s financials. They are highly professional and have developed a good understanding of schools and their processes. Their team are a pleasure to work with. I have no hesitation in recommending AMW to other schools for the purpose of conducting an audit and the preparation of financial statements.