In the Australian Capital Territory ("ACT"), the executive committee for an Owners Corporations ("OC") is required to have the OC's annual financial statements audited and tabled at its annual general meeting.
The unit's plan in the Australian Capital Territory is managed by the Unit Titles (Management) Act 2011 (the Act") and the OC is responsible for managing it.
It is quite common that an OC enters into a management agreement with a Strata Manager to perform several functions on behalf of the OC including maintaining an account of all receipts and payments, coordinating works in relation to maintenance of the common property and liaising with the executive committee on a regular basis to ensure the smooth operation of the OC.
The executive committee of an OC is generally comprised of a Chairperson, Secretary and Treasurer who exercises the functions of the OC and must exercise its functions in accordance with any decisions made by the OC at a general meeting.
A person who performs an audit must provide a written report of the audit to the OC, which then forms part of its records and may be inspected free of charge by any lot owner who arranges an inspection of the records at any reasonable time.
Under the Act the audit must be done by either a Chartered Accountant, Certified Practising Accountant, or a member of the Institute of Public Accountants; a registered company auditor or firm; or anyone else who is approved by the executive committee to perform audits.
The Act does not expressly state that the audit must be done in accordance with international accounting standards. An audit of OC's financial statements done in accordance with international accounting standards would include the person conducting the audit inspecting the OC's bank statements and conducting sampling of transactions from work orders to invoices through to payments.
The executive committee must arrange for the financial records of the unit plan to be audited before the annual general meeting if either the number of units in the unit plan is more than one hundred (100), or the annual budget of the OC is more than $250,000.
It is critical for the executive committee and the strata manager to ensure that the accounts are complete and have been properly reconciled within a timely manner and are presented for audit to allow the audited financial statements to be tabled at the annual general meeting of the OC.
If an OC fails to comply with the audit requirements above, each executive member of the OC at the time of the failure commits an offence and will be liable for a maximum of twenty (20) penalty units. Currently, the value of a penalty unit for an offence against this law is $160 for an individual and $810 for a corporation. As such an individual can be fined up to $3,200 while corporations can be fined a maximum of $16,200.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.