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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."

WARNING WARNING
Everyone is still trying to come to grips with exactly how the NEW legislation changes (that came into effect on Nov 30, 2016) will affect our strata lives and some companies may be a little slow changing some of their webpages, forms and articles to reflect the new laws.

So please be a little patient if some of the links I give you refer back to some old legislation or have simply disappeared.

I have to have SOME faith so I'm hoping most will update their info as soon as possible. Eventually everyone will be on the same page but it could take just a little time.  Just know that I will be keeping my ear to the ground for changes...and that I will do my best to fix what I can as soon as I can.

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STRATA RECORDS and STRATA 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 2015 - Division 3 - Financial statements and accounting records (Sections 92-95) AND Division 4 - Accounting records (Sections 96-99).

Here's a 'bare bones' summary of what you're required to keep:

  • Strata Roll
  • Levy Register
  • Common Seal
  • S184 Strata Information Certificates
  • Minute Book (containing the minutes of all meetings held)
  • Cash Books (for cash payments & cash receipts)
  • Receipt Book
  • Passbook, bank deposit book
  • Annual Budget details for each strata scheme
  • Detailed Accounting Records (split into the administrative & capital works funds)
  • Financial statements
  • Payment plans for unpaid levy contributions
  • Notices of recovery action for unpaid levy contributions, interest or expenses
  • Register of all notices & orders
  • Voting papers relating to motions for resolutions by the Owners Corporation
  • Voting papers relating to the election of the Strata Committee
  • Proxy forms delivered to the Owners Corporation
  • Notices of meetings of the Owners Corporation & its Strata Committee
  • Copies of correspondence received and sent by the Owners Corporation

FORM of RECORDS - OK, it appears that finally 'required' records can now be kept electronically because Section 176 of the SSMA 2015 states "A strata roll or ANY OTHER RECORD required to be made or stored by an owners corporation may be made or stored in the form determined by the owners corporation".  And I'm guessing this means "any way the Owners Corporation determines they will be kept".

Extra legislative information

The NSW Strata Schemes Management Regulation 2016: Part 3 - Financial Management: Regulations 18 thru 26 also provides 'extra' very specific details for a number of financial management areas and the links below will take you directly to what's required for each.

NSW Fair Trading has a wonderful booklet titled Strata Living.  Have a look at the section headed "Management Responsibilities" (on pages 15 & 16) which simply outlines the requirements regarding records and accounts.

The same department has another document - a Fact Sheet - titled "Responsibilities of the Owners Corporation".  Same type of information - just worded differently - but worth a look.  The first 5 topics on this fact sheet cover the area on the Keeping of Records.

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How long must everything be kept?

Under changes to the regulations, all records must be kept for 7 years.  Well, everything listed in Section 180 of the NSW Strata Schemes Management Act 2015 which is pretty much all those listed above.

TIP - Just to be safe, it may be prudent to keep everything for an additional year (or two) beyond the 7 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, provide valuable details in disputes as well as 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 - the S182

This is covered under the NSW Strata Schemes Management Act 2015 Section 182 - Requests for inspection of records 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 (NSW Strata Schemes Management Regulation 2016 Schedule 4 - Fees).  If the Strata Scheme is being managed by a Strata Manager, the search usually occurs at the Strata Management company's premises.

You can read more on the S182 at my Buying a Strata Titled Property information page.

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

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Strata Title Terms and Jargon


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.

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:

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.

To read more 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 MUST be done before 'presentation to the AGM' AND that the audit must be 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...

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.

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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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