Annual Audits – A Strata Community Health Check

Has your community had a financial statement audit recently? An audit is a health check for the community’s finances.

Strata committees have a responsibility to all owners to ensure their community complies with the law and follows best practice. This can include having a financial audit conducted by a qualified, independent auditor every year.

According to Queensland’s Body Corporate and Community Management (BCCM) legislation, an annual audit can only be circumvented if a “special” resolution resolves not to have an audit (apart from two lot schemes). The legislators wanted to make it hard for strata communities to avoid having an audit.

In New South Wales, an annual audit is mandatory for schemes with 100 lots or more.

In Victoria, smaller schemes are exempt from the legal obligation to undertake a financial statement audit. Prescribed schemes (those with over 100 lots or those that collect over $200,000 in annual fees) are required to audit financial statements at the end of the financial year.

Being a committee member of a body corporate or owners corporation carries similar responsibilities as being a member of the board of directors of a company. Directors have fiduciary responsibilities and so do committee members. An annual audit can protect committee members from possible liability.

An audit report, conducted by an auditor who specialises in strata, can also flag potential issues early, which can then be addressed before they become serious.

The auditor will provide an “Opinion” letter reporting on the accounts. A copy of this audit opinion is should be included with the notice of the next annual general meeting.

In Queensland, once the “Special” resolution fails to avoid an audit, the specific auditor may be appointed by ordinary resolution. The auditor of the body corporate must:

  • be independent
  • have appropriate qualifications and experience
  • not be a committee member or a body corporate manager

An auditor of body corporate accounts can be a registered company auditor (RCA), which we recommended, or a member of the CPA Australia and/or a member of the Institute of Chartered Accountants and/or the National Institute of Accountants.

Audits can vary in price and your Community Manager can source a range of quotes to be considered at the budget meeting prior to the AGM.

SSKB Community Managers are available to help you arrange your community’s annual financial check up.

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