Bearing in mind that the Trustees’ are the custodians of Body Corporate money and are accountable for how it is used, the Sectional Titles Act requires that the financial affairs of the Body Corporate must be audited annually.
Since the AGM must be held within 4 months of the financial year end, it is critical for the Trustees (acting through the Managing Agent) to get the books of account to the Auditors as soon as possible after the financial year-end.
The financial year-end of a Body Corporate is determined by the date that the scheme was registered by the Developer at the Deeds Office; but the financial year-end date can be changed by the Trustees, and sometimes this is better from an accounting perspective!
In my view it is advisable to appoint Auditors who are au fait with sectional title audits.
Auditors are appointed by the members at each AGM and their job is to examine all the financial transactions of the Body Corporate during the previous financial year and confirm that they are a true reflection of the financial affairs of the Body Corporate. The auditors also confirm that all the financial transactions are in accordance with Generally Accepted Accounting Procedures (GAAP).
Remember that all Auditors are registered with the Independent Auditors Board and are highly qualified – they are duty bound to render a fully independent and accurate report of their findings. If there are any irregularities in the finances of the Body Corporate they will provide a qualified audit report and you will know about any problems provided you take the time to study the statements of course!
Here is a synopsis of exactly what information the audited statements must include:
An analysis of the amounts owed by the Body Corporate to its Creditors at the end of the financial year;
Levies and other amounts that are still owing to the Body Corporate by unit owners at the end of the financial year;
The expiry dates of Body Corporate insurance policies.
The audited financial statements give you a ‘photograph’, as it were, of what the financial state of the Body Corporate is at the end of the financial year.
If, like me, you are not an Accountant and must learn to read the audited statements, ask the Managing Agent how to read and interpret them.
It’s your investment, your home, your money – It’s important!!!! Once you know how, it‘s easy, and you’ll never forget!
