This article is about the process to appoint an auditor to audit the owners corporation accounts in NSW.
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- QUESTION: Our Strata Manager tells us it is not really necessary to have our scheme audited. Are they correct in saying so?
- QUESTION: Can a single unit holder appoint an auditor at their own expense?
- QUESTION: At our AGM our owners corporation passed a resolution to appoint an auditor to audit all of our accounts. What is the procedure to appoint an auditor?
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Question: Our Strata Manager tells us it is not really necessary to have our scheme audited. Are they correct in saying so?
We have never had our scheme audited, mainly on cost grounds. However, the Strata Manager always says that it is not really necessary as the strata management company is audited annually.
What is the difference and why would an individual strata scheme need to have their books audited if the strata managing company’s books are audited every year?
Answer: The strata manager certainly shouldn’t be advising that its not necessary for a scheme to audit it’s books and records due to the fact that they themselves have to be audited in accordance with their licensing requirements.
The strata manager certainly shouldn’t be advising that it’s not necessary for a scheme to audit it’s books and records due to the fact that they themselves have to be audited in accordance with their licensing requirements….
We would always recommend that a scheme’s finances are audited.
Audit requirements are prescribed by the Strata Schemes Management Act and regulation – large schemes and those with a budget exceeding $250k (budget defined under regulations).
Andrew Terrell
Bright & Duggan
E: [email protected]
This post appears in Strata News #396.
Question: Can a single unit holder appoint an auditor at their own expense?
Answer: No, and the only way to appoint an auditor is during their Annual General Meeting or holding the Extraordinary General Meeting as a special matter.
Caren Chen
E: [email protected]
P: 0499 025 069
W: TINWORTH & CO
This post appears in Strata News #389.
Question: At our AGM our owners corporation passed a resolution to appoint an auditor to audit all of our accounts. What is the procedure to appoint an auditor?
At our AGM our owners corporation passed a resolution to appoint an auditor to audit all our accounts.
What is the procedure to appoint an auditor? Can the strata committee choose an auditing firm and sign an engagement contract with them? Or are we required to get a few quotes from different auditors and include them in an EGM for the owners corporation to vote on?
Answer: The owners corporation can either appoint a specific audit firm or just resolve to appoint an auditor and leave the audit firm selection to the Strata Manager.
The strata committee (SC) can’t just choose an auditing firm and sign an engagement contract with them. This is because under section 36 of the NSW Strata Schemes Management Act 2015, the strata committee cannot make a decision that is required by or under any Act to be made by the owners corporation by unanimous resolution or special resolution or in general meeting. Hence, the Strata Committee cannot appoint an auditor without a resolution from the OC at an AGM/EGM.
The OC can request the Strata manager obtain audit quotes and the SC could select one of the quotes. However, it is critical to appoint an auditor who has experience in the Strata industry as it is a specialised field. An audit is an independent examination of the financial report and is similar to an insurance policy for the OC.
Caren Chen
E: [email protected]
P: 0499 025 069
W: TINWORTH & CO
This post appears in Strata News #315.
Have a question about process to appoint an auditor in NSW or something to add to the article? Leave a comment below.
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Hi can a owner park in the visitors parking because they are in the community strata is very annoying that they can do what they want we are doing the right things they are always pick on us for nothing we feel that we can’t live with pease we rent
It is not critical for an auditor to be a specialist in the body corporate area-a competent auditor, if appointed would ensure that the body corporate was operating according to the relevant act When carrying out the audit
It is a fallacy that the auditor must be a specialist in body corporate ms
https://www.auasb.gov.au/Pronouncements/Australian-Auditing-Standards.aspx
The NSW owners corporation needs to have a annual audit carried out if its funds exceed $250,000 in accord with SSMA ACT NSW 2015 auditing of accounts.
The quality of the person carrying out the audit needs to be in accord with the Australian Auditing Standards – refer to above ref.
What is the procedure for appointing an auditor to audit the strata management company in WA? Is there anything in the new WA legislation on this, or is it governed by another Act?
thanks
AK
Can a single unit holder appoint an auditor at her own expense?
Hi Peter
Caren Chen, TINWORTH & CO has responded to your question in the above article.
A point of difference.
“An audit is an independent examination of the financial report and is similar to an insurance policy for the OC.”
The assumption that an audit can be assimilated to an insurance policy is incorrect.
Oftentimes, an audit report may be a “Qualified Report”. If the OC receives one of those qualified reports, that report would be worth zero in terms of the accuracy of the financial statements and the actual balance of funds in the bank account.
If the above situation should occur, the OC should seek a further forensic examination of all receipts and payments against the bank statement for the annual period and the closing balance of the previous period must be stated.
About the auditor how can we find out how he does the checking of accounts as i from the committee found a mistake that was not found by the auditor.
what do they actually do that would cover us for any mistakes not just the invoice belonging to another block of units when the strata firm has many units in charge.
You should ask to see the terms of engagement letter which the auditor should supply to your bod corporate manager
Be aware that the audit is not to check for mistakes but is to ensure that there are adequate controls in place to ensure that the body corporate funds are protected and also that the annual accounts presented at the AGN give a true and fair view if the affairs of the body corporate
Some mistakes may be missed by the auditors but unless they are material then they may be accepted
Be aware that the auditor is no a human bloodhound checking for correctness in all transactions but instead is there to ensure that all controls adequately protect the body corporate assets and that the financial statements presented show a true and fair view of the state of the finances