Would you support a body corporate audit or strata audit at your next AGM?

Strata communities handle significant financial responsibilities, from collecting levies to managing sinking funds and paying contractors. With multiple stakeholders and complex transactions, accuracy and transparency are critical. One of the most effective ways to achieve this is through an external audit of the body corporate’s financial records.

What does a body corporate audit involve?

A strata audit or body corporate audit is a structured process performed in accordance with Australian Auditing Standards, designed to provide reasonable assurance that the financial statements are free from material misstatement, whether due to error or fraud.

Steps included in a body corporate audit:

• Verification of bank balances and reconciliations
• Testing of levy income and arrears
• Review of expenditure approvals and supporting documentation
• Assessment of compliance with the relevant state legislation
• Evaluation of internal controls (e.g., segregation of duties, authorisation processes)
   

The auditor issues an independent opinion on whether the financial statements present a true and fair view of the body corporate’s financial position.

What is the strata legislation in Queensland?

In Queensland, the Body Corporate and Community Management Act 1997 requires annual financial statements to be prepared and presented at the AGM. However:

• Audits are not mandatory unless the body corporate resolves to have one.
• Committees can propose an audit as a motion at the AGM.
• Larger schemes or those with complex financial activity and financial reporting often adopt audits as best practice.

Other states differ:

• NSW: Strata Schemes Management Act 2015 requires financial statements but does not mandate audits for all schemes.
• VIC: Owners Corporations Act 2006 allows audits by resolution, similar to Queensland.
• WA and SA: Generally no mandatory audit requirement, but voluntary audits are common for transparency.

Why would lot owners elect for an audit?

Accuracy and assurance
Audits confirm that levies, sinking fund contributions, and expenses are correctly recorded and reported.

Detection of irregularities

Auditors often identify issues such as:

• Duplicate payments
• Misallocation of expenses
• Inadequate documentation for contractor payments
• Weak internal controls

Risk management

With significant funds at stake, audit services reduce the risk of fraud or mismanagement, especially in large schemes.

Confidence for stakeholders

Audited accounts provide assurance to owners, buyers, and valuers, supporting property values and community trust.

Practical strata audit considerations for your next AGM

When to consider a strata audit:

• Large sinking funds or administrative accounts
• High volume of transactions
• Recent changes in management or committee
• Concerns raised by owners

Who should consider a strata audit:

• Large residential complexes: High-rise apartment buildings with dozens or even hundreds of lots often choose to have an audit. These schemes manage substantial administrative and sinking funds, and with multiple contractors providing services such as cleaning, security, and lift maintenance, the financial complexity makes independent verification essential.
• Mixed-use developments: Buildings that combine residential, retail, and commercial spaces face unique challenges. Shared facilities and cost allocations can lead to complicated financial arrangements, increasing the risk of errors or disputes. An audit helps ensure expenses are correctly allocated and funds are managed transparently.
• Luxury or high-value properties: Premium apartment complexes and gated communities typically hold large sinking funds for future works. Owners in these schemes expect strong governance and financial clarity to protect property values, making audits a common choice for reassurance.
• Resorts and holiday complexes: Strata schemes operating as holiday resorts often deal with short-term letting arrangements and frequent transactions for cleaning, maintenance, and guest services. This high transaction volume adds complexity, and an audit provides confidence that all income and expenses are accurately recorded.
• Large commercial or industrial complexes: Business parks and industrial estates managed under a body corporate structure handle significant shared infrastructure cost, such as roads, utilities, and security. With multiple corporate owners involved, clear and accurate financial reporting through an audit is critical.

How to implement a strata audit:

• Include an audit motion in the AGM agenda
• Engage a qualified auditor with strata experience
• Ensure timely access to records for efficient completion

Gold Coast auditors protect your investments

Audit and assurance for body corporates and strata protect the community’s assets and reputation. For Gold Coast strata schemes, where property values and financial complexity are high, electing for an audit is a strategic decision that benefits every lot owner.

If you need advice or guidance as to audit services for your body corporate, get in touch with your local adviser.