Audits of owners corporation financial statements – not all audits are the same
Owners Corporations for residential and commercial properties in Victoria that consist of more than 100 lots, or which raise annual levies in excess of $200,000 per annum must cause their financial statements to be audited.
Other Owners Corporations are entitled to resolve by ordinary resolution that their financial statements, which must be presented at each Annual General Meeting, are to be audited.
The purpose of an audit of financial statements is to provide an independent reasonable assurance that the Owners Corporation’s financial statements present a true and fair view of the accuracy of the Owners Corporation’s financial statements. A standard audit may not necessarily provide an assurance that the financial statements are free from all misstatements.
As at the date of this article the Owners Corporations Act 2006 does not expressly state that the audit must be done in accordance with international accounting standards. However, the law on this issue may be updated in the future. An audit of Owners Corporation financial statements done in accordance with international accounting standards would include the person doing the audit inspecting the Owners Corporation’s bank statements and conducting sampling of transactions from work orders to invoices through to payments. If your Owners Corporation prefers that its audit is done in accordance with international accounting standards, it should expressly include this directive in the brief to the independent person doing the audit.
If an Owners Corporation resolves to have its financial statements audited, then 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;
- anyone else who is approved by the Director to perform audits;
as long as that person does not have a direct or indirect personal or financial interest in the Owners Corporation.
A person who performs an audit must provide a written report of the audit to the Owners Corporation, which then forms part of the Owners Corporation’s records and may be inspected free of charge by any lot owner who arranges an inspection of the records at any reasonable time.
Make sure the person or company doing your Owners Corporation’s audit is independent and qualified. If you would like a quote for an independent audit of your Owners Corporation’s financial statements you can contact JLGM & Co Chartered Accountants in Collingwood at www.jlgm.com.au.
Tisher Liner FC Law have specialist expertise in providing owners corporations in Victoria with easy to understand legal advice. If you would like a quote please email the details of your matter to [email protected].