This Q&A is about strata management charges in WA in relation to bank fees and whether you require a yearly audit.
Table of Contents:
- QUESTION: If our strata scheme is managed by a strata manager, do we need to obtain a yearly audit?
- QUESTION: Should we be paying strata management charges such as bank fees in relation to a trust account established by the strata manager on behalf of the strata company?
Question: If our strata scheme is managed by a strata manager, do we need to obtain a yearly audit?
Answer: The simple answer is no.
The simple answer is no.
The purpose of an audit is to ensure that the financial report of an organisation is an accurate representation of the financial situation of that organisation. However, what some people don’t understand about an audit is that this is based on only the selected samples they scrutinise. They do not necessarily check every figure in a financial report
Really what should be happening is your Strata Manager should be carrying out a number of the secretarial and accounting functions that see the financials are kept accurate.
On top of this, the AGM of the Strata Company is exactly that opportunity for all owners to essentially ‘audit’ the Strata Company accounts at their own peril when they are presented by the Strata Manager or Strata Council.
If you have reason to believe the Strata Manager or the Strata Council has failed to accurately record the financials then you may deem it necessary for the Strata Company to complete an audit. However, this won’t necessarily bring these concerns to light.
If you do pursue the accounts to be audited please ensure you have clarified what that actually means by the auditor or go with an industry specific auditor such as Ascend Strata.
Jordan Dinga
Abode Strata
E: [email protected]
P: 08 9368 2221
This post appears in Strata News #495.
Question: Should we be paying strata management charges such as bank fees in relation to a trust account established by the strata manager on behalf of the strata company?
Our signed SCA strata management agreement does not include a schedule of charges for services referred to elsewhere in the document as applicable. Is the strata manager entitled to charge for and paid for those services and at what rate?
Is a strata company obligated to pay charges that are not visible in strata records eg alleged bank fees and charges which do not appear on statements issued by a bank in relation to a trust account established by the strata manager on behalf of the strata company.
Answer: The agreement will normally provide for all of the fees and charges.
With regard to charges, my understanding is that the agreement will normally provide for all of the fees and charges however the Strata Company may not necessarily utilise all of the services/charges available to them.
If a Strata Manager operates a trust account in the name of the Strata Company then the Strata Company would be liable for all fees and charges on that account because it is a Strata Company account. It is worth noting that the Strata Company may also have a separate Reserve Fund account which may also incur fees/charges.
You indicate there are bank fees being charged for an account that is not a Strata Company account, but a Strata Management account.
Some Management Companies operate one trust account for all of their managements and would then on-bill for any fees and charges they incur to that trust account, over all of their managed Strata Companies.
If that is the case then you may be billed an apportioned charge for bank fees however this should be reflected in the Management Contract and clearly defined. These would normally be contained in the annual budget also.
Shelley Fitzgerald
Strata Alliance
E: [email protected]
P: 9330 3959
Note: this general information about strata council member problems is an opinion only and suitable specialists in these areas should be sort for clarification and assistance on all points.
This post appears in Strata News #318.
Please note: this response was provided prior to the proclamation of the new strata title amendments.
Have a question about strata management charges for items such as bank fees? If you have something to add to the article, please leave a comment below.
Read next:
- WA: Relationship between Strata Manager and Strata Council
- WA: Strata Manager’s Duties under the Strata Titles Act Amendments
- WA: Q&A Where can I make strata manager complaints in WA?
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A pooled trust account for all strata companies under management is a reasonably priced option and management software is able to split the transaction charges based on the receipt types automatically. Interest earned on a Trust account does not accrue to either the individual Strata Company or the Strata Manager, but I believe is a contribution to a fund that provides compensation where necessary to those who may be the subject of crime within the industry.
Actual bank charges are generally a very small cost to the annual budget, and when considering the budget I’d recommend looking closely at what the strata company is being charged for photocopying or manual receipting by the Strata Manager as that can add substantially to cost.
Happy hunting!