Our owners corporation received a $650k insurance claim, but our budget is under $75k. Does that trigger a compulsory audit?
Our owners corporation has fewer than 100 lots and an annual budget under $75,000, so we wouldn't normally meet the threshold for a compulsory audit. Under section 95 of the Strata Schemes Management Act 2015, an audit becomes compulsory once a scheme's annual budget exceeds $250,000, or it qualifies as a large strata scheme.
We've now received an insurance claim of $650,000. Does this large one-off payment count as revenue or income towards that $250,000 audit threshold, even though it's a reimbursement of an expense rather than ordinary operating income? If it does count, is an audit required?
Whether a large insurance claim counts towards the $250,000 compulsory audit threshold is a genuine grey area.
This is a grey area, but I would say that it is not revenue. It's the reimbursement of an expense. Others might say it should count towards the $250,000 threshold for a compulsory audit under section 95. Strictly speaking, it probably is revenue like legal fee recovery income, and indeed levies are probably recovery income too if you really think about it. The Act is not clear, though. Levies are mentioned and definitely count. Other types of revenue may not.
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I am an FCPA and Tax Agent and run the only accounting firm in NSW that specialises in strata accounting. Whilst my practice is 11 years old, I have 15 years experience in the industry.
Based in Helensburgh (northern Illawarra) we audit strata from NSW, VIC, QLD & ACT.
My firm also lodges tax and BAS and acts as an ASIC agent too for those very old buildings that are Company Title Strata.
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