5.1.1 Basic financial funds and reports | Owners Corporation Network

5.1.1 Basic financial funds and reports

The accounts you receive from you strata manager, monthly, quarterly or annually will generally be:

  1. Balance Sheetas at the date the report is produced
  2. Income & Expenditure Statementfor the financial year-to-date

Balance Sheet: The balance sheet details how much money the scheme has as at the specified date. On the balance sheet is listed

  1. On one side: Net owners funds: the total owners funds (as at the report date), and
  2. On the other side: Net assets: what those funds comprise

Income & Expenditure Statement: The income and expenditure statement details just that, the income and expenditure of the scheme – over a specified date range. Note: this date range need not be a full year! It is important to understand the period and length of the date range to interpret the spending appropriately and especially to compare it to budget and historic years. The statement lists income and expenditure under two separate funds.

  1. Administrative Fund - is generally used to meet recurrent expenses, such as contract payments to strata and buildings managers, insurance premiums, water & electricity charges as well as ongoing maintenance contracts such as those for lift, pool and gardening
  2. Sinking Fund – is generally used to meet all capital and non recurrent maintenance expenditure on the building which is the subject of the Sinking Fund Forecast ( see below)

For comparative purposes the Income & Expenditure Statement should list the ‘current period’ actual dollars spent, the ‘annual budget’ estimates (important note: the annual budget estimate is for 12 months where as the current period may be for less). As well the prior year actual amounts may be shown.

Under each of these funds will be listed details of the revenue collected and allocated to that fund less the expenses paid out from that fund over the period specified. The revenue less the expenses will show a surplus/deficit for that period. This surplus/deficit plus the opening balance of the period will show that period’s closing balance. The closing balance of the Administrative Fund plus the Sinking Fund will equal the Balance Sheet’s net owners funds total.

The revenue and expenditure is shown in the accounts as totals classified under each category for example:  levies received, strata manager fees paid, painting expenses etc. If you want to drill down to more detail and find out what payments make up these category totals you will need to obtain a detailed Expenses / Income Report (sometime called the General Ledger) which will show every transaction for each of the categories in the accounts. Your strata manager should make this information available to you as an executive committee member. Finally, the most detailed level you can go is to view the actual bank details and invoices themselves. These will be kept by your strata manager in month by month files.