Financial Best Practices For Stratas
Strata lot owners should keep themselves informed about their strata corporation, attend general meetings, vote, and review information such as strata council minutes, budgets and financial statements.
Here are some financial best practices to consider.
Keep It Simple
- Financial information such as budgets and financial statements should be presented simply and clearly so that strata lot owners, and other readers, can easily understand them.
- Have all strata funds in bank/credit union accounts in the legal name of the strata corporation. It is good practice to have separate bank/credit union accounts for separate funds: operating, contingency reserve and special levies. Strata management companies holding funds on behalf of their clients must hold the funds in a brokerage trust account. Strata management companies holding funds in trust for their client must have separate accounts for operating, CRF and special levies.
Promote Transparency and Disclosure
- Financial records such as budgets, financial statements and bank statements should be easily available to owners. Additional owner scrutiny is a good thing.
- Review, and include in the financial statements, all revenue sources such as: parking, storage, laundry machines, fines and the interest on invested funds.
- The process for selecting contractors should be open and transparent. If recommendations are received for a contractor the recommendations should be impartial i..e. no incentives. Many stratas will consider a minimum of three contractors when selecting a contractor.
- All expenditure and contract decisions should be recorded in the strata council minutes.
Other Financial Best Practices
- Every month the strata council needs to review bank statements; monitor whether strata lot owners are paying their monthly strata fees and any special levies; and review the treasurer’s report for accuracy and to ensure expenditures have been approved before they were made.
- Double check on work done and goods received. Make sure that invoices are monitored to ensure that work is actually done or goods received for your strata corporation.
- Petty cash should be for a minimal amount ($50 or less) and documented with receipts for payments.
- Have at least two people formally responsible to review and approve expenses and sign cheques.
- How long have people been in positions, e.g., treasurer, strata property manager? How is their work being checked? It is important to have work independently reviewed.
- Consider having an audit or an independent financial review (such as a review engagement) done for the strata corporation. Audits conducted by the Real Estate Council of BC (RECBC) on real estate brokerages who employ strata property managers are only samples of some of a brokerage’s trust accounts. These RECBC audits are not a detailed audit of an individual strata corporation’s accounts. Also it should be noted that the Real Estate Special Compensation Fund has limits to the amounts it insures. Insurance is provided to a maximum of $100,000 per strata corporation and to a maximum of $500,000 for all the strata corporations that a brokerage is managing.
The information on this website about strata housing is provided for the user’s convenience as a basic starting point; it is not a substitute for getting legal advice. Learn more about the site’s purpose and limits. The content on this website is periodically reviewed and updated by the Province of British Columbia as per the date noted on each page: February 2015.