The Financial Management Rules of Sectional Title Schemes are set out in Part 5 of the Management Rules. The Management Rules appear in the Regulations published in terms of the Sectional Title Scheme Management Act, dated 7 October 2017.
The previous set of Management Rules published as Annexure 8 of the Sectional Titles Act of 1985, is still applicable to schemes which were in existence before the STMA came into existence.
One can argue that as in everything that has to do with Sectional Titles, in the application, the rules must be enhanced by and bedded in with your common sense, wisdom and, above all, reasonableness.
Financial Management Rule Structure as set out in Part 5
1. Financial Year, Functions & Powers
2. Maintenance Repair and Replacement Plan
4. Administrative and Reserve Funds
5. Contributions and Charges
6. Financial Records, Budgets, Reports and Audit
All streams of finances come together, are touched by and are reflected in the yearly audit.
The audit requires proper financial management by a skilled manager, which includes proper bookkeeping.
The audit, and bookkeeping requirements building up to the audit, provide the knowledge in the back of your mind as owner, that your investment is safe, that funds have been collected and managed to the benefit of your property and those of the other owners.
Financial management functions, as determined in the Rules, includes, but not exclusively, the following:
– Administration of the financial affairs of our clients in accordance with the specific mandate and service level agreement agreed to.
– Collection of funds payable to our clients, duly reported on a monthly basis by means of accurate and up to date statements.
– Verification and payment of all accounts payable by our clients in accordance with all standing instructions.
– Compliance with all legal requirements pertaining to the correct processes and record keeping when and where our clients have a need.
– Keeping full records of the administration including proper books of account (computerized).
– Keeping complete records of personalised statements of each owner.
– Preparation of an annual estimate of income and expenditure for submission to the Boards of Trustees of Body Corporates and Management Committees of Home Owners Association for approval and the determination of monthly levies.
– Providing monthly financial statements to all stakeholders.
– For Boards of Trustees of Body Corporates and Management Committees of Home Owners Association: Arrange the annual audit and on completion, submission of the audited statement
Insurance (Body Corporates and Home Owner Associations)
– Assist Boards of Trustees or Management Committees in the determination of replacement values, arranging for valuations where required and obtaining competitive insurance premiums.
– Arrange for the insurance of buildings and improvements as well as other insurance the Body Corporate or Home Owners Association may require.
-Handle insurance claims in regard to the common property.