No access to the ledger in AGM Financial Statement (Canberra)

Where I am, a much larger class B strata in Canberra, we also just present the higher level summary of income and expenditure totals against the budget. As treasurer, I write some commentary about the sorts of things covered in categories that might be less obvious and explanations for things that are substantially over or under compared with previous years or expectation. Through the year, I keep track of the individual items ledger because it is not uncommon for our managing agent to put an expense against the wrong budget line.

At the very least, your executive committee should have access to the detail and should demand it of the managing agent. A function of the treasurer includes keeping track of this stuff and a function of the EC is to supervise the treasurer. The EC cannot perform its function without this information from the managing agent. The EC should politely but firmly remind the managing agent that it works for the Owners Corporation, whose functions are exercised by the EC. The managing agent is not the boss.

Since your general meeting has directed your EC to provide that detail. If the managing agent obfuscates then the next step might be for the EC to engage an auditor to check the accounts and get that detail out of the managing agent.

• This reply was modified 10 months, 3 weeks ago by .

On the issue of getting an audit.

Have the committee appoint its own auditor. The auditor that the strata manager puts forward will be their regular auditor. The auditor provides favourable audits in order to keep the strata managers business.

Secondly , the auditors appointed by the strata managers are chosen on a price. You’ll find their reports full of qualifications, to the extent that you can’t rely on anything the auditor reports.

Your own auditor will not only check your accounts, but will check the veracity of the processes used by the strata manager.

Remember that it’s usual that the accounts of your strata are managed by a person who knows how to drive the software, but has little accounting knowledge.

As this forum is for sharing experiences and educating owners, here is some information that will possibly shock some readers.

Your experience with not being allowed access to full financials is very frequent. It is a perfect way for strata managers (and committee members if they allow it), to hide financial mismanagement.

At least in NSW, strata laws are very weak to enforce proper financial audits for strata complexes. Owners have very poor chances to enforce better financial management UNLESS they have strong and ethical committee members. To rely on Fair Trading and NCAT is a waste of time and resources.

Let us back it up with some verifiable facts for one large strata complex in Sydney (218 properties). We will only list recent events, as they go all the way back to 1999.

a) Large strata complex was recommended to engage forensic auditors in NSW Fair Trading case 7563482 on 19 May 2015. Strata Manager and committee members ignored it.

b) Large strata complex in Sydney was recommended to engage forensic auditors in NSW Fair Trading case 7938059 on 9 October 2015. Strata Manager and committee members ignored it.

c) Annual General Meeting on 20 October 2017 did not provide audited accounts to owners. It was published two and half years after due date without any financial details in late April 2020 but backdated to 31 August 2017! It was full of errors and did not have details of what the auditor really signed off.

d) An owner offered FREE access forensic audit (would cost owners nothing) but strata manager and committee members prevented it in June 2017.

e) Annual General Meeting on 17 October 2018 did not provide audited accounts to owners. It was allegedly signed off on 18 October 2018 (1 day after due date) but not published until late May 2019. It was full of financial errors.

f) Annual General Meeting on 22 October 2020 did not provide audited accounts to owners. It was published on 3 November 2020 (13 days after due date). It had financial errors.

g) Annual General Meeting on 27 October 2022 did not provide audited accounts to owners. It was published on 7 December 2022 (43 days after due date). It had financial errors.

h) Annual General Meeting on 26 October 2023 did not provide audited accounts to owners. It was published on 11 December 2023 (46 days after due date, but only made available on 14 December 2023, 49 days after due date). It had financial errors.

i) Two NSW Fair Trading cases were opened for this in 2023 and 2024:

In first case 11138875 they confirmed the strata manager was not compliant with Clause 21 of the Strata Schemes Management Regulations 2016 which requires that the accounts and financial statements of the owners corporation with budget above $250,000.00 must be audited before presentation at Annual General Meeting (AGM) in accordance with Section 95 of the Strata Schemes Management Act 2015. Strata manager and committee members refused to share this information with owners.

The second case 11204124 is underway.