Question: Are audit of the owners corporation financial statements a legal requirement in the ACT? Our treasurer and strata manager are at odds with what elements are considered to reach the $250,000 threshold.
We are a complex of 17 units. Are audits of the owners corporation financial statements legally required in the ACT? Our treasurer and strata manager are at odds with what elements are considered to reach the $250,000 threshold.
The strata manager advised that our total assets (sinking and admin fund) plus the proposed owner levies for the coming year are the basis for assessing if we reach the $250,000 threshold. Our treasurer believes it is the proposed budget only (and not other assets already held and not proposed to be spent).
The audit was commissioned without consulting the committee, and now there is disagreement on paying the costs. Any advice or guidance you can provide would be greatly appreciated.
Answer: An audit is to be arranged before an AGM if there are more than 100 lots in the building OR the annual budget of the plan is more than $250,000.
For compulsory unit title audits in the ACT, the Unit Titles (Management) Act 2011 [A2011-41] is almost identical to NSW strata legislation.
Schedule 2, Section 2.1(1)(g) states an audit is to be arranged before an AGM if there is either more than 100 lots in the building OR the annual budget of the plan is more than $250,000.
Section 2.1A explains how to work out the annual budget for audit purposes. Paraphrasing it is an estimate of all fund contributions plus “any other amounts held by the owners corporation for the purposes of managing the units plan at the beginning of the financial year…”
As per NSW legislation, the latter has been defined as cash held at the beginning of the year.
So, as per NSW, the calculation is cash held at the beginning of the year + all types of contributions raised during the year greater than $250,000.
Matthew Faulkner
Matthew Faulkner Accountancy PTY LTD
E: matt@mattfaulkner.accountants
P: 0438 116 374
There is no monetary penalty. However, it would be a breach of the Act. Licensees can get reprimanded by the regulator. If any owner took the matter to their states strata tribunal it would be automatic orders to have it done, with the Licensee asked why they were ok with breaching the Act. If the audit then discovered serious issues its even more serious for the Agent/Manager.
I suppose you could compare it to not being insured. That would breach the Act. If every thought it was ok and there was a problem they cannot make a claim for the Licensee is the one who gets in trouble (sued) and potentially loses their license.
If its in the Act you simply have to do it.
What if mandatory audits were not conducted in previous years? Is there a penalty for not doing them?