Question: I feel our audited financial reports do not disclose clearly to unit owners all relevant financial information. Might the body corporate be requested to reproduce the statements in a more appropriate format?
I am a residential lot owner in a large body corporate complex in Brisbane. 63 floors are up-market residential units and 12 are operated by an international hotel chain.
At the recent AGM, audited financial reports (statements) of the body corporate for the prescribed period were presented and accepted as appropriate in the circumstances. Those same reports, however, did not disclose clearly to unit owners all relevant financial information of concern. They seemed to be rather misleading or vague in some important material respects and failed to communicate properly and in detail all of the information that might be considered reasonable in the circumstances. It appears those statements are prepared automatically using an ‘industry specific’ body corporate management whiz-bang computer system. This, therefore, may be a software deficiency – user friendly but poor on presentation.
I understand the notion of ‘special reports’ and am familiar with relevant legislature and the current views of the Australian domestic accounting bodies as to their use and purpose. International accounting standards, however, emphasise more concepts of full disclosure and proper communication. In the circumstances, might the body corporate be requested to reproduce the statements in a more appropriate format?
Answer: Is there any reason for the body corporate to change its agreed practices to meet the wishes of the one owner?
I think this question is really about the extent to which the body corporate needs to adapt to the needs of an individual owner.
From the information provided, it seems the accounts have been presented in a format that is acceptable to an independent auditor, who is presumably familiar with strata accounts, and to the body corporate, who have approved them at a general meeting. One owner, who seems knowledgeable about different types of accounting, would like a different standard of reporting to be used.
Is there any reason for the body corporate to change its agreed practices to meet the wishes of the one owner? Unless the owner can demonstrate that the accounts are actively wrong it’s hard to think of why this should. Body Corporates are run by majorities and the majority has indicated they are satisfied. Individual owners have to accept that they are part of a collective – you don’t always get what you want when you are part of a bigger system.
For the owner, this doesn’t mean that their opinion is invalid or that there are no further avenues for discussion. If you have reasonable questions about the accounts then the Committee and body corporate manager will usually be happy to discuss them. Then, motions can be presented to committee and general meetings. You can request the changes you want and see if other people will agree with you. In this case, I suspect the changes may be difficult to achieve as the strata company can’t just change its accounting system and owners may not want any additional costs associated with different reporting and recording standards, but it never hurts to ask. The important thing is to understand that owners need to reach collective decisions and while anyone can propose an idea, others have equal rights to accept and reject that.
William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924
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