Service Charge Accounts

Service Charge Accounts

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We have a requirement for an Audited set of Service Charge Accounts for the share of Service charge on a block of 4 flats.

As these are non statutory accounts can they be examined and a report given by a competent person ie a Chartered Account with a practicing certificate.

Or does this need to be done by a registered auditor.

There are only about 4 transactions per year so we are trying to keep the costs down.

Thanks in advance.
Lee

Replies (4)

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By User deleted
04th Aug 2004 16:59

Company
Yes,
The monies are collected and paid via a Ltd Company.
I'll check the M&AA, providing they do not require an audit then I think we should be Ok.
Thanks for your help.

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By User deleted
04th Aug 2004 14:26

Depends on type of organisation
Is the service charge collected and maintenance expenses expended via a limited company or are they dealt with outside a company by a residents association?

Where an 'audit' is required for a company depends on the company's memorandum and articles of association (assuming that the size limits re CA85 do not apply). If an audit is required under the M&AA then it my understanding that this would be a statutory audit and the company would need to appoint a registered auditor.

If there is no audit requirement in the M&AA then there is no statutory audit requirement. The accounts would need to prepared for statutory format for members/filing at Companies House and then may be subject to an accountants report (not an audit report).

Under the Landlord and Tenant Act 1985 where there are more than 4 flats in a building then a lessee can request for a summary of costs reflected in the demands for charges. There is a requirement that the summary of expenditure is certified by a qualified accountant - basically ensuring there are receipts/documents to support amount spent.

The above is a statutory requirement and the lease itself may require a certification regardless the number of flats. I would expect the lease to set out who could be regarded as carrying out the verification work and what was involved.

The Landlord and Tenant Act 1985 provision is to be replaced by s152 Commonhold and Leasehold Reform Act 2002 - the provision relating to the statements of accounts had not been enacted last time I looked but I believe when enacted will require certified accounts by a qualified accountant to be produced for each tenant.

The Landlord and Tenant Legislation etc affects both the limited company and residents association.

Hope the above is of some help

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JPW
By jpwattam
02nd Aug 2004 10:29

Requirement?
Where is the requirement set out? Or is it just one of the residents making a fuss?

Depending what the requirement says, you can surely appoint anyone to do an 'audit'. You need to make sure that the scope of their work is clearly defined, and confirmed in an engagement letter from them. I'm sure that any qualified or unqualified accountant would be able to discuss your specific requirements, but don't be talked into signing up for work that nobody requires.

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By David160
03rd Aug 2004 08:09

Avoid use of the words audit / auditor etc.
These words have meanings under the companies acts. The auditor could find they are in a difficult position if they are used and a full audit is not done by a registered auditor.

If the memorandum and articles insist on an audit, then change them. (remember to send the original signature copy to companies house and a copy to the current auditor if there is one).

If a flat holder is kicking up a fuss, then tell him audits are expensive, (will he pay the bill?) and get agreement to send photocopies of the bank statements, invoices etc. to everyone. Then everyone knows everything that is going on, and an audit is not really neccessary. If he insists that a check is done, then get a sole practioner accountant to give the records a quick look and he can devise a suitable certificate to attach to the accounts, (the accounts do not need to be prepared by him).

Is there another reason why an proper audit is required?

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