This article discusses why caretaking agreement financial disclosure in body corporate financial reports is limited to legally required entries, despite the long-term and significant cost of these agreements.
Question: Our body corporate has a 25 year Caretakers Agreement. Why isn’t more detail of the payment shown on the Balance sheet or notes?
Our body corporate here on the Gold Coast has a 25 year Caretakers Agreement. Other than the monthly payments on the income and expenditure report, no other information is shown on the Balance Sheet or Notes.
Can you tell us what are the legally required entries to the Annual Financial Reports or if any changes to term or duties would need to be added to the Annual Financial Reports?
Our own Auditor has advised that the entries to the Income and Expenditure are all that is legally required.
Answer: The answer from the auditor is that the entry is all that’s legally required.
Well, there you go, you’ve had the answer from the auditor, the entry is all that’s legally required.
Unfortunately, I understand what this person saying. They don’t really feel there’s enough financial reporting. It’s a large financial expense. It might be hundreds of $1000s and that’s all you see . You’re asking ‘Hang on, how come we’re recording every tiny little item that goes out, but then we have this one substantial payment and we’ve really got no idea what happens to that’. Sorry, the legal requirements have been met within that. So that’s really the end of the answer.
I guess there’s a wider question here around how people feel about the caretakers and the frustrations they have, as contracts. I’m a body corporate manager in the service industry and we’re not allowed to have a 25 year contract. I can’t think of any other circumstances in our lives where we signed 25 year contracts. It baffles me that this situation with the caretakers is being allowed to continue.
I can’t see any benefit for the consumers having these contracts. Personally, as a body corporate manager, we represent consumers. That’s what we do. I can feel the pain of the owners out there who have a lot of frustration and I can only say I’m personally disappointed that there’s not wider action at the government level to try to resolve some of these situations.
I’m not going to be making myself popular with all the caretakers out there but from a consumers perspective, it just doesn’t make much sense.
Interview Comment: We do have lots of questions coming in across Queensland about saying no to extensions, and the way that the caretaker agreement is set up, and whether caretakers are doing the things that are listed on their agreement, and what happens if they’re not? It does seem to be a big problem, obviously, across Queensland.
I used to work in New South Wales and it’s a totally different situation there. Most of the building managers are on a short contract of 1-3 years and they have to work to keep their contract. Most of them do a good job. I always had excellent relationship with all of the building managers that I worked with and I thought they tried really hard. They are motivated by the fact that at the end of that contract period, if they’re not meeting the standards, then the owners have the option of changing and that seems reasonable. That’s how our whole consumer society is structured. It’s very strange to have this one particular anomaly that doesn’t really adhere to that.
Interview Comment: We’re certainly not saying that there aren’t good caretakers out there. There are plenty of great caretakers out there and they do form part of our audience, and we’re delighted to have you and it’s great to be keeping yourself informed.
There’s plenty of people doing a good job and are trying really hard. I’ve got no problems with that. But it’s just the contract. Those people who are doing a good job and we’re trying hard, they’d still be keeping their contracts, and they’d still be getting the benefits from that anyway.
This post appears in Strata News #510.
William Marquand Tower Body Corporate E: willmarquand@towerbodycorporate.com.au P: 07 5609 4924