LEGISLATIVE REQUIREMENTS FOR COMMUNITY SCHEMES PART 2

Continuing with the legislative requirements in terms of the Sectional Title Management Act the following are very important to take note of:

Annual general meetings (AGM’s) must be held once a year within four months of the end of the scheme’s financial year.

Regulation 26 in the Act details the requirements in terms of financial records, budgets, reports and audits. 

The fidelity sum insured must be recalculated following the AGM.  Simply, the amount is calculated using the value of the scheme’s investments and reserves at the end of the last financial year plus 25% of the community scheme’s budget for its current financial year.

Another new requirement in terms of the Act is the requirement that the audit of the body corporate’s financial statements must be carried out by an independent auditor within four months of the end of the body corporate’s year end.

The definition of an auditor in terms of the Act is:

Auditor means a person accredited to perform an audit in terms of the Auditing Professions Act, (Act 26 of 2005).

This purpose of the audit of the body corporate’s annual financial statements is to ensure that the financial affairs of the body corporate are effectively managed.