Owners Corporation Financial Reports

By Tim Dickson, Director LDB Property Pty Ltd, Founding Partner LDB Accountants and Advisers

As a lot owner in a Strata Development are you confident that you understand the information provided in the financial reports for your development? Do you know how to use this information to inform your engagement with the Owners Corporation’s Mangers and your O.C. management committee?

When you attend the Annual General Meeting of your Owners Corporation, as Lot owners, you will be asked to vote to accept the Annual Financial Statements for the immediately preceding financial year as being an accurate report of the O.C.’s financial position.

Prior to the AGM you will have been provided with a balance sheet reflecting the year end financial position recording all assets and liabilities as at the balance date. The bank balance, recoverable levies, prepaid levies and unpaid creditors will be detailed in this report and together with the financial year’s income and expenditure report will provide an important understanding of O.C. operations and financial viability. This information will supply a base for understanding the assumptions behind the upcoming year’s budget which you will be asked to approve.

The upcoming year’s budget is of course crucial to determining the quantum of levies to be raised in order to keep your O.C. solvent and operating efficiently.

In preparing for attendance at the AGM, having a list of questions to raise at the meeting will be the most effective way to feel engaged in the process and satisfied that any of your concerns are being addressed. It is important that any such matter is presented to the manager prior to the meeting.

For Tier 1 & 2 owners corporations it is also required that the O.C. provides you with a capital works or sinking fund overview and itemized report detailing all sinking fund expenditure for the reporting period, as well establishing the forthcoming year’s budget and your input is important.

Your informed engagement in the AGM or other meetings is the best way to build trust with the oversight committee and managers and having trust in the quality of financial information provided is a very important part of this process.