Auditing body corporate accounts
The following information is relevant to schemes registered under the:
- Standard Module
- Accommodation Module
- Commercial Module
Schemes registered under the Small Schemes Module do not have such strict auditing requirements-specific information for this module follows.
Schemes registered under the Specified Two-lot Schemes Module do not require a bank account and therefore do not need an audit.
Statement of accounts
A statement of accounts shows the body corporate’s income and spending for the year.
At its annual general meeting each year, the body corporate must make a decision about auditing the accounts. Owners vote to decide if the accounts are audited or not.
Motion not to audit
The body corporate can pass a motion at its annual general meeting not to audit its accounts. The motion is passed by special resolution.
The motion not to audit must:
- be in the form: "that the body corporate’s statement of accounts for the financial year (state the financial year concerned) not be audited" and
- have voting instructions (an explanatory note) saying: "If you want the accounts to be audited, vote ‘no’; if you do not want the accounts audited, vote ‘yes’.
An owner wanting body corporate accounts to be audited should vote ‘no’ to the motion not to audit the accounts.
If a motion not to audit the accounts is not passed, the body corporate must have its accounts audited. It will need to pass a motion to appoint an auditor, which must be passed by ordinary resolution.
Audit at other times
If the body corporate decides at the annual general meeting not to audit its statement of accounts for a particular financial year, at any time it can:
- pass an ordinary resolution to audit the accounts for a particular period or for a particular project, and
- appoint an auditor.
Auditor
A body corporate must also include on each annual general meeting agenda a motion to appoint an auditor. This normally sits below the motion 'not to audit' the accounts.
The motion for the body corporate to appoint an auditor is not voted on if the body corporate has already passed the motion not to have their accounts audited.
The motion appointing the auditor must include the name of the auditor. The motion must pass by ordinary resolution.
The auditor must provide a certificate reporting on the accounts. A copy of the certificate must be included with the notice of the next annual general meeting to be held after the certificate is received by the body corporate.
Qualifications and experience of auditor
The auditor who is appointed by ordinary resolution of the body corporate must:
- be independent
- have appropriate qualifications and experience
- not be a committee member or a body corporate manager.
The auditor examines the prepared financial statements and gives an opinion on whether the financial statements show all relevant information and provide a fair picture of the financial position of the body corporate.
Small and two-lot schemes
Different rules apply for bodies corporate registered under the Small Schemes Module and the Specified Two-lot Schemes Module.
Small schemes can decide to audit their accounts, but it is not compulsory for a motion about the audit to be on the agenda of the annual general meeting.
Specified Two-lot schemes do not have a bank account and do not need to have an audit.