Question: Can money in the cash account be used to pay for a shortfall in the Administration Funds?
A Sinking Fund Term Deposit on being transferred to the Villas Cash account to pay for Pool refurbishment will have some cash remaining from the Term Deposit.
Can this money be used to pay for a shortfall in the Administration Funds which will not be able to pay the necessary accounts ( e.g. Insurance, Caretakers Fees, General Managers fees, normal electricity etc.) until after the A.G.M which is in June and levies have been approved until July Quarter 2020.
Answer: What you are suggesting is possible provided there is money available in the current account to pay the admin bills.
The funds released from your term deposit will be paid into the general account for your scheme and expenditure from both the admin and sinking funds is drawn from this. So, from a practical perspective, what you are suggesting is possible provided there is money available in the current account to pay the admin bills.
From an accounting perspective, one fund can’t lend to another. If the admin account doesn’t have sufficient funds to cover expenses it will go into deficit and this amount will need to be repaid at a future date. The sinking fund will continue to show the full amount ascribed to this account even if the actual cash available at the bank is below this amount.
This post appears in Strata News #494.
William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924
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