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"When dealing with Strata schemes it's important that all the Strata Records and Strata Accounts be kept accurate and totally up-to-date. The Owners Corporation is legally responsible for maintaining these at all times - unless of course a Strata Manager has been delegated to look after them on their behalf. Here's a brief guide to the sorts of Strata Accounts and Strata Records you need to keep and for how long - plus a few extra topics you may find interesting."
STRATA RECORDS and STRATA ACCOUNTS
- Legislative requirements
- Extra legislative information
- How long must everything be kept?
- Why must the Accounts and Records be kept up-to-date?
- Inspection of the Strata Records
- Annual financial statements
- Administrative and Sinking Funds
- AUDIT of Accounts
Legislative requirements
Legislation requires that certain records and accounts be kept (and maintained) by the Owners Corporation. Details of everything you need to know regarding those responsibilities can be found in the NSW Strata Schemes Management Act 1996 - Part5: Records & Accounts section. Here's a 'bare bones' summary of what you're required to keep:
- Strata Roll
- Levy Register
- Common Seal
- Minute Book (containing the minutes of all meetings held)
- Detailed Accounting Records (split into the administrative & sinking funds)
- Cash Books (for cash payments & cash receipts)
- Receipt Book
- Passbook, bank deposit book
- Financial statements
- Register of all notices & orders
- Voting papers relating to motions for resolutions by the Owners Corporation
- Voting papers relating to the election of the Executive Committee
- Proxy forms delivered to the Owners Corporation
- Notices of meetings of the Owners Corporation & its Executive Committee
- Copies of correspondence received and sent by the Owners Corporation
Extra legislative information
The NSW Strata Schemes Management Regulation 2010 - Regulations 5 thru 8 also provides 'extra' very specific details for a number of areas, one being records and accounts, and the links below will take you directly to the detail.
- Accounting Records (regulation 5)
- Receipts (regulation 6)
- Cash Record (regulation 7)
- Levy Register (regulation 8)
The NSW Office of Fair Trading has a wonderful booklet titled Strata Living. Have a look at the section headed "The responsibilities of the Owners Corporation" (around page 27) which outlines the requirements regarding records and accounts.
The same department has another document, called a Fact Sheet, titled "Responsibilities of the Owners Corporation". Same type of information - just worded differently - but worth a look.
How long must everything be kept?
Under changes to the regulations, all those listed above must be kept for at least 5 years. The only real variation to this general rule being that a proxy can be discarded 5 years AFTER its expiration date.
TIP - Just to be safe, it may be prudent to keep everything for an additional year (or two) beyond the 5 years because, sure enough, as soon as you throw something out you'll find you need to refer to it.
Why must the Accounts and Records be kept up-to-date?
Apart from having to comply with legislation, assist with taxation and auditing requirements and allowing others to determine 'how a scheme is going', prospective purchasers of units in the Strata Scheme need the records and accounts to be correctly maintained to show them they aren't 'buying into problems'.
Inspection of the Strata Records
This is covered under the NSW Strata Schemes Management Act 1996-Section 108 and is commonly known as a strata search which is when a request is made to the Owners Corporation to allow an inspection of the records AND accounts of a Strata Scheme.
Any such request must be in writing and be accompanied by the statutory fee prescribed by the regulations. If the Strata Scheme is being managed by a Strata Manager, the search usually occurs at the Strata Management company's premises.
.WARNING - If written permission isn't provided the inspection won't be allowed.
TIP - The alarm bells should start ringing if an owner doesn't want you to look at the records for the scheme. Generally, owners with nothing to hide welcome these searches as they would like to see their property sell as quickly as possible
Strata Title Terms and Jargon
- Strata Terms and Jargon (to find out what everything means)
ACCOUNTING
Annual financial statements
The NSW Strata Schemes Management Act 1996 (specifically Sections 106 & 107) 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 106 of the Act states regarding the timing of when the 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 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 2 links below which take you directly to the relevant sections in the Records and Accounts area of the Act. Everything you must know is all there.
- Section 106: Owners corporation must prepare financial statements
- Section 107: Auditing of accounts and financial statements
TIP - Accounting in Strata is such a complex area that, unless your Strata Scheme is managed by professional Strata Managers, professional accounting advice should be sought.
Administrative and Sinking Funds
All levies received should be paid into the Administrative fund AND the Sinking 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.
To read more about Levies, the Administrative fund and the Sinking fund go to the Levies information page.
AUDIT of Accounts
Whether your Strata Scheme is managed by the 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 the:
- obtaining of an independent, expert opinion regarding the truth & fairness of the financial statements
- detection of any errors
- ensuring of compliance with accounting principles & standards
- detection and prevention of any fraudulent activity
- compliance with strata legislation (if applicable)
TIP - Using an auditing firm that knows about Strata and all its peculiarities is strongly advised. There's no substitute for experience especially when it comes to 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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