Financial management statements
We offer Strata services Melbourne wide including:
- Port Melbourne
- Elwood
- McKinnon
- Murrumbeena
- Prahran
- Oakleigh
- Richmond
- Elwood
- St Kilda
- St Kilda East
- Windsor
- South Yarra
- Toorak
- all surrounding areas
Compliance with Regulations and State Legislation
- Statutory Requirements: Strata Minders’ preparation of financial accounts is not merely a bookkeeping exercise; it is a legal obligation governed by specific state legislation (e.g., the Owners Corporations Act 2006 in Victoria). These laws dictate the format, content, and frequency of financial reporting. The manager ensures that all statements meet these legal standards, including requirements for separate funds (e.g., the administration fund and the maintenance fund), proper accrual or cash accounting methods, and clear disclosure of all income and expenditure.
- Accuracy and Transparency: The core principle of these financial statements is to provide a true and fair view of the Owners Corporation’s financial position. This means every transaction, from levy payments to invoice disbursements, is accurately recorded and categorized. The statements are designed to be transparent, allowing any lot owner to easily understand how their contributions are being used to manage and maintain the common property.
The Annual Income and Expenditure Statements
- Purpose: This is the primary financial report that reflects the Owners Corporation’s performance over the past financial year. It serves as a detailed summary of all the money that came into the corporation and all the money that was spent.
- Content: The statement is typically broken down into sections for the administration fund and the maintenance fund.
- Income: This section details all sources of income, primarily levy contributions (both regular and special levies) from lot owners. It may also include interest earned on bank accounts or other miscellaneous income.
- Expenditure: This section itemizes all expenses incurred during the year. These are typically categorized for clarity, including:
- Administrative expenses: Manager’s fees, postage, printing, bank charges, and legal fees.
- Utilities: Common area electricity, water, and gas.
- Maintenance and repairs: Costs for gardening, cleaning, plumbing, electrical work, and general upkeep of common property.
- Insurance: Premiums for the building, public liability, and other required policies.
- Professional services: Audit fees, valuer’s fees, and other consultant costs.
- Comparison to Budget: A crucial element of the annual statement is a comparison of the actual income and expenditure against the budget that was approved at the previous year’s AGM. This allows lot owners to see if the corporation stayed within its financial plan and to question any significant variances, promoting accountability.
Next Year's Proposed Budget
- Forward Planning: The budget is a forward-looking financial plan. It is a detailed estimate of the Owners Corporation’s income and expenditure for the upcoming financial year. Strata Minders, leveraging its experience and knowledge of the corporation’s history and current needs, drafts this document.
- Factors Considered: The proposed budget is based on several key factors:
- Historical data: Reviewing the previous year’s actual expenditure to identify trends and recurring costs.
- Known future costs: Accounting for planned maintenance projects, upcoming insurance renewals, or a potential increase in utility rates.
- Inflation: Estimating the impact of rising costs on services and supplies.
- Maintenance Plan: Considering any large-scale projects or capital works identified in the long-term maintenance plan.
- Two-Part Budget: Like the financial statements, the budget is typically separated into two funds:
- Administration Fund: This covers the day-to-day operating expenses. The budget for this fund determines the regular, ongoing levies.
- Maintenance Fund (or Sinking Fund): This is for future capital works, major repairs, and replacements of common property assets. The budget for this fund is vital for ensuring the corporation has the financial capacity to handle large, non-recurring expenses without resorting to special levies.
Enclosed with the Annual General Meeting Agenda
- Integral Part of the AGM Pack: The annual financial statements and the proposed budget are not standalone documents. They are a mandatory inclusion in the notice and agenda pack for the Annual General Meeting (AGM). This is a legal requirement designed to give all lot owners ample time to review the financial health of the corporation before the meeting.
- Basis for Discussion and Decisions: At the AGM, these documents form the basis for several key decisions:
- Acceptance of Accounts: Lot owners formally vote to accept or reject the previous year’s financial statements.
- Approval of the Budget: The proposed budget for the new year is presented for discussion and approval. This is where lot owners have the opportunity to question line items and vote on the financial direction of the corporation.
- Setting of Levies: The approval of the budget directly leads to the setting of the levies for the upcoming year, as the budget determines the amount of income required from lot owners.
By providing these comprehensive and compliant financial statements and budgets, Strata Minders ensures that the Owners Corporation’s financial management is transparent, accountable, and legally sound.
Get In Touch!
(03) 9016 0123
Have any questions regarding Owners Corporations?
From basic questions to complex compliance inquiries, we’re here to help.
