Reading financial statements
Balance Sheets and Income and Expenditure Statements
Summary
If you have an AGM coming up and are struggling to comprehend the Strata Company financial statements, we have put together this article to help owners understand some unfamiliar terms.
If you still have questions about your financials, please contact us five (5) working days ahead of the AGM to provide you with the information.
Balance Sheet
A balance sheet gives owners key information about the financials in their scheme and these are set into three (3) categories
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Assets |
Cash in the bank - total funds in the bank Accounts receivable - billing of electricity, fobs, etc which are awaiting payment GST Paid - The amount of GST paid on payments out of the bank account since the last BAS return GST Unpaid - The amount of GST that hasn't yet been paid on outstanding, GST applicable supplier invoices Levies receivable - levies that are due, but are yet to be paid |
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Liabilities |
Accounts payable - Invoices that have been input, but are awaiting payment. This could be pending because they are awaiting authorisation from the Council. GST Collected - The amount of GST collected on deposits into the bank account since the last BAS return GST Uncollected - The amount of GST that hasn't yet been collected on arrears less the GST collected on the amounts paid in advance Paid in Advance - levies which owners have paid in advance and are not yet due Unidentified Deposits - sums deposited with incomplete/incorrect payment identifiers |
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Owners' funds |
Opening Balance - The balance at the start of the financial period BAS Clearing - Where GST payable/refundable from a lodged BAS shows until it is paid to / refunded by the ATO. It moves from the GST account to BAS clearing when lodged and then will return to zero once the BAS is paid/refunded. Net income for the period - Total income exclusive of GST for the financial period |
Income and Expenditure Statements
This report is simply a statement of all the income and expenditure of the Strata Company during a set timeframe. We often send these to councilors ahead of their quarterly meetings so that they provide a snapshot of spending in different budget categories. These are also sent to owners as part of the AGM notice pack and will cover the previous 12 months to the end of the strata company's financial year.
Income is primarily made up of levy contributions, but can also include costs that can be recovered, such as the on-charging of electricity consumption. The income will include levies that are past due, so if an owner is in arrears, their levies will show as "income" in this report. These overdue payments will be identified in the "levies receivable" column of the balance sheet.
Expenditure is all the expenses that have been incurred during the period. These are categorised in accordance with budgeted line items. All invoices which have been received and input will show, although some may be awaiting authorisation to be paid. Owners must refer to the "Accounts Payable" column on the balance sheet for more details.
A note about GST. Where a Strata Company is registered for GST, amounts on the balance sheet will exclude GST.