STRATA RECORDS and STRATA ACCOUNTS

ACCOUNTING

Annual Financial Statements

The NSW Strata Schemes Management Act 2015 (specifically Sections 92 through 95) has certain requirements regarding annual financial statements so make sure you do your research and find out exactly what needs to be done.

Here's what the Section 92: The OC must prepare financial statements of the Act states regarding the timing of when the financial statements must be prepared:

• the period that commences on the date of registration of the strata plan and ends on a date that is not earlier than 2 months before the date of the first annual general meeting, AND
• each period that commences on the date up to which those statements were last prepared under this division and ends on a date that is not earlier than 2 months before the next succeeding annual general meeting.

For more details on what should be in the statements have a look at the links below which take you directly to the relevant sections in the Financial statements and accounting records area of the NSW Strata Management Act 2015.  Everything you must know is all there.

• Section 93: Requirements for financial statements
• Section 94: Statement of key financial information
• Section 95: Auditing of accounts and financial statements

NSW Fair Trading

As is usually the case, NSW Fair Trading has provided us with very user-friendly forms covering this Key Financial Information area.
And, here they are:

• Statement of Key Financial Information for the Administrative & Capital Works Funds  (PDF)
• Statement of Key Financial Information for Other Funds  (PDF)

TIP - Accounting in Strata is such a complex area that, unless your Strata Scheme is managed by professional Strata Managers, professional "strata specialist" accounting advice should be sought.  You've got to get someone who knows what to look out for.

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Administrative and Capital Works Funds

All levies received will be paid into the Administrative fund AND the Capital Works fund depending on how the scheme's budget is structured.  Separate accounting records must be maintained for both funds but monies can be held in the one bank account.

Listed below are the NSW Strata Schemes Management Act 2015 links that cover the Admin and Capital Works funds.  They're worth taking a peek at.

• Section 73: Administrative fund
• Section 74: Capital Works fund
• Section 75: Investment of money in admin fund or capital works fund
• Section 76: Use of admin or capital works fund for purposes of other fund
• Section 77: Distribution of surplus money in admin fund or capital works fund

To read all about Levies, the Administrative fund and the Capital Works fund go to my Levies information page.

AUDIT of Accounts

Whether your Strata Scheme is managed by the actual owners (i.e. the OC) or by professional Strata Managers, there are many benefits for the Strata Scheme having its accounts examined by independent auditors.
These benefits can include:

• obtaining an independent, expert opinion regarding the truth & fairness of the financial statements
• detection of any errors
• ensuring compliance with accounting principles & standards
• detection and prevention of any fraudulent activity
• compliance with strata legislation (if applicable)

Have a look at this...

I managed to uncover a webpage from MWB Accountants that goes into WHY getting an audit done regularly is a good thing - so have a look as it gives a great overview of the overall benefits.  MWB ARE based in Victoria - so some of the finer points in auditing Victorian strata accounts will probably differ from NSW Strata accounts - HOWEVER the reasons why are very applicable.  Here's the link : Benefits of having your Owners Corporation’s Financial Report Audited Annually.

Current legislation...

The current legislation that covers this area is: SSMA 2015 - Section 95: Auditing of accounts and financial statements.

It essentially states that once the budget for a strata scheme goes over $250,000 then an audit of the accounts and financial statements MUST be done 'before presentation to the Annual General Meeting' AND that the audit 'must be carried out in accordance with the Australian Auditing Standards'.

It also says that the auditing of accounts is COMPULSORY for Large Strata Schemes - which are those schemes with more than 100 lots (excluding any parking or utility lots).  So there you go...

Some of the Finer Points...

Sadly - and something very typical in the world of strata - this amount (the $250K) is not as clear cut as it appears to be.  It relates to more than just what's levied for the Administrative and Capital Works Fund budgets.  It also includes any other income and any other amounts held by the Owners Corporation (such as deposits, etc).

But don't despair because, on the Kelly Partners blog, they go through the some of the 'Mandatory' requirements under the new legislation in an article called "NSW Strata Alert: New Mandatory Provisions - Section 95".  Here they go through EXAMPLES showing how the $250K budget size can be determined.  Now, this might sound 'dry' to a lot of you out there but it'll be of importance to those affected - i.e. large schemes and those with budgets exceeding $250K.

BIG TIP - Using an auditing firm that knows about Strata and all its peculiarities is also strongly advised for those schemes where an audit is NOT compulsory (i.e. those schemes NOT designated as large and schemes where the annual budget is not over $250K). It's ALWAYS a good idea to keep an eye on things - especially when money is involved AND there's no substitute for 'specialist' experience especially when it comes to strata financial and accounting matters.

DISCLAIMER:  All information on this website is of a general nature and is intended as a guide only.  Readers should check all information obtained from this website for accuracy from other sources and seek professional legal advice before taking any action based on any information obtained from this website.  Information on this website should not be substituted for proper legal advice.  The owners of this website will not be held responsible for any action taken as a consequence of same.

EXTERNAL SOURCES:  The owners of this website do not make any warranty or representations regarding the information, products, services provided by or qualifications of any external sources listed on this website.  Readers should make their own appropriate enquiries regarding accuracy, qualifications, licences, etc.  The owners of this website will not be responsible or liable in any way for any representations made by any external sources listed on this website.

IMPORTANT NOTE:  This website deals with strata matters in NSW, Australia only.  Legislation varies in different states and territories and in other countries.  For information pertaining to places outside of NSW, Australia please refer to the appropriate legislation for your region.

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