This Q&A about privacy and correspondence within a body corporate has been answered by Tammy Lynch, Tower Body Corporate.
Question: Are we required to have an audit of our body corporate accounts carried out? If so, how often and who should conduct the audit?
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Are we required to have an audit of our body corporate accounts carried out? If so, how often?
If this is requested to be done at an AGM, our we best to use our current accountant or should this be done by another company suitably qualified?
Also, once complete, are we able to ask to see the result of the audit?
Answer: Unless the body corporate has resolved by special resolution at the AGM not to have the statement audited, the body corporate must have its statement of accounts for each financial year audited by an auditor.
The body corporate must keep proper accounting records and each financial year, prepare a ‘statement of accounts’ showing the income and spending of the body corporate for the financial year. A copy of the statement of accounts must accompany the notice of the Annual General Meeting (AGM) after the end of the financial year for which the accounts have been prepared.
Audit
Unless the body corporate has resolved by special resolution at the AGM not to have the statement audited, the body corporate must have its statement of accounts for each financial year audited by an auditor.
The motion relating to the appointment of an auditor:
- must be included in the agenda for the meeting; and
- must include the name of the auditor proposed to be appointed; and
- is not voted on if, it is resolved not to have the statement of accounts audited.
The motion for a special resolution must be:
- in the form ‘that the body corporate’s statement of accounts for the financial year (state the financial year concerned) not be audited’; and
- accompanied by a note ‘NOTE: If you want the accounts to be audited, vote ‘no’; if you do not want the accounts to be audited, vote ‘yes’.’.
Who may perform the audit?
The body corporate audit may NOT be audited by a committee member, body corporate manager or any associate of these persons.
The person undertaking the audit must be a member of:
- CPA Australia or
- the Institute of Chartered Accountants in Australia; or
- the Institute of Public Accountants; and
- have a total of 2 years auditing experience.
Audit results
On completion of the audit of the body corporate’s statement of accounts for a financial year, the auditor must issue a certificate:
- stating whether the statement of accounts gives a true and fair view of the body corporate’s financial affairs; and
- if the statement of accounts does not give a true and fair view of the body corporate’s financial affairs— identifying any deficiencies in the statement; and
- a copy of the auditor’s certificate must accompany the notice of the next annual general meeting held after the certificate is given.
Relevance
Body Corporate/Strata Property auditing requirements vary from state to state.
The above information is relevant to schemes registered under the Queensland Body Corporate and Community Management Act:
- Standard Module
- Accommodation Module
- Commercial Module
Schemes registered under the Small Schemes Module do not have strict auditing requirements and it is not compulsory for a motion about the audit to be on the agenda of the AGM.
Schemes registered under the Specified Two-lot Schemes Module are not required to maintain a bank account and therefore do not need an audit.
The information herein is general information only and is not intended to constitute, legal, financial or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.
Tammy Lynch
Tower Body Corporate
P: 07 5609 4924
E: [email protected]
This post appears in Strata News #379
Have a question or something to add to the article? Leave a comment below.
Read More:
- QLD: Q&A Can I Access Body Corporate Records
- QLD: Q&A Privacy and Correspondence within Body Corporates
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Your comments on Auditors in Queensland are incorrect-in Queensland there must. E a resolution passed to appoint and auditor otherwise no auditor is appointed
Q to Robert Fleming…whose comments, and which comments, are incorrect re the appointment of an auditor? I can’t see anything in this history which talks about either how or by whom an auditor is appointed.
I am a qualified accounatnt and the secretary of our Body Corp. Frankly I find the appointmentof an auditor a waste of time and indeed money. Look at any auditors report and it will show how adept they are at sitting on the fence… yet, too many people believe that an auditor is there to “check the figures” whereas all they do is check the system.
The accounts for our Body Corp were wrong … blatetly wrong, for a couple of years (an issue relating to GST involving several thousand dollars) and yet the AGMs accepted the accounts because the auditor had (literally) put his little rubber stamp on the pages. Unfortunalely my plees for people to double check the accounts for themselves have been ignored. A good professional committee is more than capable of examining the figures and can do so without charge.
Re Flipper’s comments:
I would think one of the reasons why so few audits reveal errors etc is precisely because there is an audit regime in place. The very presence of governance processes drives governance outcomes. This is not so much about the quality of the audit process per se but with basic human nature ie as soon as you measure people’s behaviour you change their behaviour. There always will be a difference between what people do when they think some one is watching and when they think no one is watching. Decrease the risk of detection and the errors increase. Increase the risk of detection and the errors decrease. Unfortunately, there would be few complexes in QLD who benefit from having an accountant on their committee during the financial year….so the next best control is a professional audit at the end of the year.
There are two main problems with the current audit regime in QLD and these concern not what it does, but what it doesn’t do… 1) it does not forensically audit the transactions, and 2) it does not cover non-compliance with the BCCM legislation.
Just think how much better our strata world would be IF compliance audits were compulsory and IF there were real penalties for non-compliance…especially by recalcitrant BCMs.
Hi Flipper
The following response has been provided by Tammy Lynch, Tower Body Corporate:
Whilst bodies corporate committees would generally benefit from the expertise of a qualified accountant on its committee, it remains that s.153(5) of Body Corporate and Community Management (Accommodation Module) [SM s.155] states in relation to auditing:
A member of the committee, a body corporate manager, or an associate of a member of the committee or a body corporate manager, can not be appointed to audit the accounting records or the statement of accounts of the body corporate.
The restrictions imposed above are intended to ensure the auditor is independent.
Regarding who may conduct the audit:
The BCCM Act’s Dictionary provides that an ‘auditor’ is someone who is EITHER a registered company auditor OR someone who meets the requirements specified in the relevant Regulation Module eg CPA etc. The Dictionary also provides that a ‘registered company auditor’ is someone who is registered as such under the Corporations Act 2001 Part 9.2. For details on this, go to the Corporations Act’s s.1281 – s.1285.
Registered company auditors are regulated by ATSIC, whereas CPAs etc are ‘regulated’ under the in-house rules of their respective associations.
The UOAQ has recommended for several years that the auditor should be sourced by the committee, not the BCM who prepares the books etc for the body corporate.
If year after year the owners elect NOT TO audit the accounts (in Qld), is there a maximum number of years this can happen before they HAVE TO be audited?