The Indispensable Role of Bookkeeping and Auditing for Owners' Corporations (“OC”)
The recent controversy surrounding the proposed maintenance project at Neptune Terrace has cast a spotlight on the financial management practices of owners’ corporations[1]. This incident highlights the importance of being open, monitoring finances closely, and communicating effectively with all parties involved. Effective bookkeeping and auditing services are crucial for owners’ corporations to ensure transparency, mitigate risks, enable informed decision-making, and maintain long-term financial stability.
It is crucial to stay transparent and honest as new information emerges. Keeping a close watch on financial matters is also essential to prevent similar incidents in the future. Effective communication with everyone involved is key to resolving issues and preventing misunderstandings. Professional bookkeeping and auditing services play a vital role in promoting transparency and fostering trust within owners’ corporations
Enhancing Financial Transparency through Expert Bookkeeping and Auditing Services
The controversy surrounding Neptune Terrace arose in June last year when the owners’ corporation approved a maintenance plan worth HK$107 million, which was over HK$30 million higher than the estimate by the Buildings Department. However, it was later discovered that Neptune Terrace did not meet the 40-year building age requirement for applying for funding under the “Building Rehabilitation Facilitating Services 2.0” scheme, and the owners’ corporation did not disclose the engineering contract documents.
General owners may face the following issues:
1. Opaque Owners' Corporation Management
- Owners may encounter situations where the owners’ corporation does not disclose important documents such as engineering contract files, leading to suspicions and distrust.
2. Unreasonable Maintenance Plans
- Under the proxy voting system, owners may not be able to effectively influence the formulation of maintenance plans, resulting in unreasonable maintenance plans.
3. High Maintenance Costs
- Owners may face situations where individual engineering companies demand high maintenance fees, which may not have been reasonably assessed or proven to be justified.
4. Improper Owners' Corporation Management
- Owners may face situations where the owners’ corporation is controlled by external forces, leading to improper management and misuse of resources.
The situation at Neptune Terrace, where residents demanded an open and transparent vote-counting process for the proposed maintenance project, underscores the importance of transparency in building trust within the community. By embracing professional bookkeeping and auditing services, owners’ corporations can maintain a high level of transparency, fostering a sense of confidence and trust among residents.
Proactive Risk Management and Mitigation Strategies for Owners' Corporations
Beyond promoting transparency, professional bookkeeping and auditing services play a crucial role in identifying and mitigating potential financial risks. Experienced professionals can analyze financial data, identify potential vulnerabilities, and recommend proactive measures to address them before they escalate into major issues. This proactive approach is particularly important in the context of owners’ corporations, where unexpected maintenance costs, insufficient reserve funds, or mismanaged budgets can have severe consequences for individual owners.
Key areas for owners:
- Establishing clear criteria for determining the manager’s remuneration fees.
- Evaluating the adequacy of staffing levels and ensuring that allocated personnel fulfill their designated responsibilities.
- Overseeing the contractual arrangements between the Owners’ Corporation and suppliers. This includes implementing standardized procurement procedures, conducting background checks, and verifying supplier references. For instance, scrutinizing the selection process for suppliers involved in backslope works and maintenance tasks.
Empowering Informed Decision-Making with Accurate Financial Data
In addition to professional bookkeeping and auditing services, owners’ corporations can benefit from a range of specialized accounting and auditing services tailored to their unique needs. These services are designed to provide owners’ corporations with comprehensive financial insights and ensure the integrity and reliability of their financial data.
- Preparing standard financial report (e.g. Executive Summary, PL, BS, Bank Summary, etc.)
- Preparing Additional Reporting (e.g. Budget Comparison, Monthly/ quarterly IO report)
- Study and review on the internal control procedure on preparation of financial reporting including the keeping all transaction record, handling of cash receipt, procedures of services procurement, and approval process within the IO
- Digitalization on bookkeeping procedures in order to get timely information
- On-site visiting and auditing
- Preparing Audit Report in accordance with statements of Auditing Standards issued by the Hong Kong Society of Accountants
- Organizing AGM for answering inquiries from the owners
Ensuring Regulatory Compliance and Adhering to Best Practices
Owners’ corporations operate within a complex regulatory framework, with specific requirements governing financial reporting, auditing, and record-keeping. Professional bookkeeping and auditing firms specializing in this sector possess a deep understanding of these regulations and can ensure that the corporation remains compliant with all relevant laws and industry best practices. This not only mitigates legal and financial risks but also instills confidence in stakeholders that their corporation is adhering to the highest standards of governance and financial management.
By partnering with experienced professionals, owners’ corporations can stay up-to-date with changes in regulations, implement best practices for financial reporting and auditing, and avoid costly penalties for non-compliance. This commitment to regulatory compliance also enhances the corporation’s credibility and reputation, fostering trust among residents and other stakeholders.
References:
[1] “樂翠臺億元維修風波｜法團主席再次嘗試搬走票箱不果 被居民噓走”，HK01，[線上]. 可取自: https://www.hk01.com/%E7%AA%81%E7%99%BC/999227/%E6%A8%82%E7%BF%A0%E8%87%BA%E5%84%84%E5%85%83%E7%B6%AD%E4%BF%AE%E9%A2%A8%E6%B3%A2-%E6%B3%95%E5%9C%98%E4%B8%BB%E5%B8%AD%E5%86%8D%E6%AC%A1%E5%98%97%E8%A9%A6%E6%90%AC%E8%B5%B0%E7%A5%A8%E7%AE%B1%E4%B8%8D%E6%9E%9C-%E8%A2%AB%E5%B1%85%E6%B0%91%E5%99%93%E8%B5%B0
Contact NOVA now for Professional Bookkeeping and Auditing Services for Owners' Corporations
At NOVA, we recognize that owners’ corporations have unique financial management needs that differ from traditional business entities. Our team of experienced professionals specializes in providing tailored bookkeeping and auditing services specifically designed for owners’ corporations. We understand the complexities involved in managing common areas, reserve funds, and maintenance projects, and our services are customized to address these specific challenges. Over the past few years, we have successfully handled and managed over 100 property books and audits for various owners’ corporations. This extensive experience has allowed us to develop a deep understanding of the unique financial intricacies involved in managing multiple properties within a corporation.
Our bookkeeping services ensure accurate and timely financial record-keeping, while our auditing services provide independent assessments of the corporation’s financial statements and internal controls. We work closely with the management team and owners to ensure that all financial information is transparent, reliable, and compliant with relevant regulations.
