The committee of management, which is made up of lot owners or their proxies, is represented by the Body Corporate manager. The committee directs the Body Corporate manager to carry out the decisions it makes on a range of financial issues relating to the management of the common property via decisions made at committee meetings. The Body Corporate manager subsequently follows the committee’s instructions and completes the responsibilities assigned through the meeting minutes, the body corporate audit examines the financial elements and choices taken during these sessions.
The management of the Body Corporate is governed by a contract of appointment of the manager and the services are provided by the various contractors who in turn hold contracts with the body corporate for services like upkeep and cleaning of the shared assets. As part of the body corporate audit we shall run tests to determine if the management fee has been charged in accordance with the appointment agreement as well as Payments to contractors are made strictly in line with agreements.
Sometimes mixed-use buildings may have multiple Body Corporates and this might give rise to the requirement to run multiple body Corporate audits. Any body corporate audit engagement comes with a substantial focus on cost allocations and record keeping.
The body corporate’s responsibilities include managing the common property, repairs and maintenance. They must also maintain accurate financial records and prepare the financial statements.
Every year, prescribed body corporations are required to conduct a body corporate audit of their financial records. Prescribed Body Corporates are those that have more than 100 lots. This covers parking lots, storage facilities, townhomes, apartments, and retail and commercial properties.
An audit of the financial statements gives the owners and management of the owner’s corporation assurance on the financial statements, even if your body corporate is not a specified body corporate. Managers can present the audited financial statements at the AGM’s.
The committee may decide to undertake a voluntary audit, even though it is not required by the Body Corporate, in order to guarantee trust in the administration of the Body Corporate’s business to report to the other non-participating lot owners at AGMs.
THE BENEFITS OF A BODY CORPORATE AUDIT ARE AS FOLLOWS:
- Getting an unbiased, professional assessment on the accuracy and justice of the financial statements
- Detection of any errors
- Ensuring compliance with accounting principles & standards
- Detection & prevention of any fraudulent activity
AFTER ALL, THE FOLLOWING MAY BE NEEDED TO COMPLETE AN EFFECTIVE AND EFFICIENT BODY CORPORATE AUDIT:
- Access to accounting software or the general ledger
- Income and Expenditure Statement
- Balance Sheet
- Copy of the prior year’s audit report
- Trial Balance
- Invoices and receipts for money received during the audited financial year
- A copy of the plan of subdivision
- Members Register
- Invoices paid during the financial year
- Bank statements obtained over the audited financial year
- Statement of insurance for the asset under audit
- Minutes of every meeting held over the audited financial year
- Approved budgets for the financial year being audited
- Contract of appointment of the manage
- Copy of Business Activity Statements (if applicable)
ONLINE BODY CORPORATE AUDITS:
The process to audit the fund of a Body Corporate can be carried out completely via correspondence. The advent of cloud-based reporting and accounting makes the process far simpler than earlier when an auditor would spend hours in person with the manager of the OC. One of our auditor’s shall be in touch with you requesting preliminary information to prepare an audit plan and based on this audit plan further documents shall be requested. These could be copies of invoices, contracts and minutes of meetings and using these supporting evidences we can complete the audit of Body Corporate completely via correspondence.
Frequently Asked Questions
Does every body corporate need an audit?
Most owners corporations above a certain size or with fee income over a set threshold are required to have their annual financial statements audited under the relevant state legislation. Smaller schemes can sometimes pass a resolution to waive the audit – we can confirm whether that applies to your scheme.
How long does a body corporate manager audit take?
Once we have the preliminary information and supporting documents from the manager, most audits are completed within a few weeks, depending on the size of the scheme and how quickly records are provided.
What records does the body corporate manager need to provide?
Typically bank statements, invoices, contracts, minutes of committee and general meetings, and the prior year’s financial statements. We’ll give you a specific checklist once we understand your scheme.
Who is responsible for engaging the auditor – the committee or the manager?
The committee of management is generally responsible for engaging the auditor, though the body corporate manager often coordinates the process on the committee’s behalf.
What happens if the audit identifies an issue?
We report any discrepancies or concerns directly to the committee, along with recommendations for resolving them, so the committee can address the issue before it affects the scheme’s financial position.
How much does a body corporate audit cost?
Fees depend on the size of the scheme and the complexity of its financial records. We provide a fixed quote upfront once we understand the scope of the audit required.
Related Compliance Services
Body corporate audits sit alongside several related compliance areas we help clients with: if your body corporate or owners corporation also needs to lodge a tax return, we can handle both together. We also provide incorporated association audits, not-for-profit audits, and rental trust account audits for real estate agencies, so if you’re involved with more than one type of entity requiring an annual audit, we can coordinate all of them.
Body corporate audit requirements vary by state and by the size of your scheme, and the cost of an audit depends on how many lots and how much financial activity the body corporate has each year – our team can confirm exactly what’s required and how often an audit is needed for your specific body corporate before quoting.