The majority of strata schemes in NSW will have their finances audited by an independent auditor. This process can help to ensure the strata scheme is being managed effectively, minimising the risk of unnecessary waste, overspending and even corruption. So when does financial auditing occur – and is it a mandatory process?
The answer will depend somewhat on the size of your strata scheme. For larger NSW strata schemes of 100 units or more, financial accounts must be audited every year and the results presented to the Annual General Meeting (AGM). The Strata Schemes Management Act 2015 also outlines that any strata scheme with a budget of more than $250,000 must have its financial accounts audited annually. For two-lot schemes, there is no requirement for financial accounts to be audited. However, auditing may be useful for every size of strata scheme.
What happens in a strata scheme financial audit?
A strata audit involves an independent auditor, who is appointed to examine the financial records of the owners corporation. These records include the statement of income, and expenditure of the administrative fund and capital works fund. As the results are later presented at the AGM, auditing offers a number of benefits:
- It provides an independent opinion about the veracity and fairness of the scheme’s financial affairs
- It alerts owners and strata managers to any errors or potential compliance issues
- It helps to alert the owners corporation to any fraudulent or dubious-looking activity
- It encourages a general sense of transparency for owners within strata
- It maintains high standards for record keeping and accounting for that strata scheme.
How is an auditor appointed?
An independent auditor is typically appointed by the owners corporation or its strata manager during the AGM. They can also be appointed at an Extraordinary General Meeting if required.
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Can a strata owner appoint an auditor at their own expense?
The only party who can appoint an auditor is the owners corporation or, if it chooses, its strata manager. If you have concerns about the financial aspects of your strata scheme, you can contact your strata secretary or your strata manager to discuss these.
A change to a new strata manager could save in costs
Here at Jamesons, we’re proud of our track record when it comes to maintaining transparent, accurate and fair financial records for our strata scheme clients. We also offer a unique service to help strata schemes reduce costs. If you make the move to Jamesons, we start with an in-depth smart save audit to identify potential areas to save. In some cases, these strata management solutions can save schemes tens of thousands of dollars per year.