Assessment Area Financial Controls Assessment Last Assessed: 22nd Apr 2022 at 3:43 pm Responsible Party: Detailed Assessment - Financial Controls Detailed Assessment - Financial Controls How responsive are the trustees/directors to financial issues facing the Community Scheme? * Very responsive and pro-active. Issues are nipped in the bud. Responsive. Issues are dealt with quickly. Fairly responsive. Not very responsive. Slow and inconsistent in their actions and responses. No, not really. Things are allowed to drag on/worsen before action is taken. Unresponsive and tardy. Abdication the norm. Does the Community Scheme/Developer/Operator conduct its own bank accounts or are these conducted through trust accounts in the name of the Managing Agents/third parties? * Yes - in its own name Yes - through trust accounts in the name of the Managing Agents No - bank accounts are irregular/are in the name of a Trustee/Director/Office bearer/third party Who all has access to the bank accounts of the Community Scheme e.g viewing or operating? * Yes - formally delegated to appointed - Trustees/Directors, Office Bearers, Developer or Estate Management Contractually mandated and appointed third parties e.g. Managing Agents/Accountants/Lawyers A combination of parties e.g. Trustees/Directors/Estate Management/Managing Agents/Accountants Unrelated third party/very loose arrangement among Trustees/Directors/Third Parties Don't know/Can't establish Are the bank accounts closely monitored and scrutinised independently by the Directors/Trustees/Office Bearers e.g. bank charges, eft payments, cheques, debit orders, interest charges, unpaid items etc? * Yes - particular focus is placed on the independent verification of all transactions Yes to a degree - this is done but not consistently No, not really. While balances are monitored, there is room for much improvement here. No, very vulnerable to fraud. Does the Community Scheme have robust payment process controls in place e.g. segregation of approvals, robust processes around beneficiary validation, processes around "value" having been received, dual payment release? * Yes – this forms a key dimension of financial control. These controls are rigidly applied by the Managing Agents/Trustees/Directors. Yes to a large degree – our controls are robust, but there have been times where we have broken with our processes. Yes to some degree - our controls are fairly robust, but we are inconsistent and vulnerable in areas. No, not really. Our processes are very inconstant and are continually breached. No, not at all. We are highly vulnerable here as a result of full reliance on the integrity of people involved. These aspects are handled entirely by the Managing Agents/Developer/Operator/Third Parties. Do the banking controls employed by the Community Scheme/Trustees/Directors/Managing Agents/Developer/Operator include (indicate): * Tight control of pins and/or access codes Payment/beneficiary authentication and authorisation, dual release/dual signatory controls Enforcement of strong passwords SMS advices and active monitoring of accounts Cybercrime awareness, anti virus and patch updates Staff lifestyle monitoring None of the above. Which of the following financial controls does the Community Scheme/Managing Agents/Developer/Operator/Trustees/Directors actively apply? * Segregation of duties (e.g. the person loading a payment can't release the payment) Banking system controls (e.g. strict password control, requiring multiple signatures or releases)). Cash flow monitoring and forecasting Regular monitoring and reconciliation of accounts (e.g. debtors control and bank) Regular management accounts showing performance relative to budget Expenditure and procurement controls None of the above. Are the cash balances of the Community Scheme invested with reputable accredited financial institutions? * Yes. Don't know as these are done on our behalf. No - we go for the highest return. Is fidelity, professional indemnity and cybercrime insurance held by parties i.e. managing agents, operators, third parties, accountants, representatives of the Community Scheme who have access to/are able to operate on the bank accounts of the Community Scheme? * Yes Don't know/Can't establish No How good is the Community Scheme’s financial reporting (e.g. provision of comprehensive annual financial statements)? * Excellent. Trustees/Directors and the Community Scheme always know exactly where they stand. Good. The Trustees/Directors and Community Scheme generally get accurate information on time, but there are times where information is delayed and/or not 100% accurate. Reasonable. The Trustees/Directors and Community Scheme normally get the financial information they need, but there are times where this information is slow, inaccurate or incomplete. Not great. The Trustees/Directors and Community Scheme often don't get the financial information they require when they need it or it is not very comprehensive or accurate. Very weak. Trustees/Directors and the Community Scheme almost never get the financial information they need in time and/ or get inaccurate or incomplete information. Does the Community Scheme have suitably qualified external accountants or auditors? * One of the biggest, most reputable professional firms. A reputable, mid-sized professional firm. A fairly small, professional company. An individual who renders independent services. A small independent company that offers accounting services. Nothing is formalised/rely on ad-hoc service providers when needed Retire entirely on Developer/Operator/Managing Agents for the provision of these services. Does the Community Scheme take/hold deposits from users of communal facilities and services or from owners undertaking building alterations or making improvements to their properties which could impact the common property? * Yes, definitely. This is done as a matter of policy. Deposits are returned upon assessment post event. Yes to a large degree. This is fairly well managed but could be improved. Yes to some degree. We are very inconsistent here and deposit control is weak. No, not really. While it is a policy, it is seldom enforced and we are often faced with damages. No. Deposits are not taken, but recoveries are attempted in the event of damages/transgressions. Not at all. We are often left with damages/breakages or facilities requiring repair/rectification. Amounts are never recovered from transgressing parties. Has the Community Scheme incorporated the 10 year maintenance plan into budgets and cash flow projections? * Yes - this forms an integral part of the budget. Yes, to a large extent. Yes to a very small extent. We have incorporated only essential elements of maintenance. No, not really. We have only discussed what is required but nothing has been formalised/included in budgets. No, not at all. How capital intensive and realistic/executable and manageable is the 10 year Maintenance Plan? * Very complex and unrealistic. The extensive wear and tear to infrastructure/facilities will require significant management/on-going expenditure/will be very hard to quantify and manage. High. There is on-going wear and tear and extensive capital replacement requirements/difficult to quantify. Moderate. There are reasonable quantifiable/manageable capital expenditure requirements. Not very. There are limited capital expenditure requirements that are relatively easy to quantify/execute/manage. Not at all. It relates predominantly to basic general maintenance/is easy to quantify/execute/manage. Is there specific financial oversight over key expenses and expenditure items e.g. contractors, utility accounts, service providers, employees and ancillary items like debit orders, insurance premiums, bad debts and the recovery of insurance claims and/or the recovery of excesses from owners/lessees where applicable? * Yes - This is done pro-actively by Trustees/Directors over and above the reliance on Managing Agent/Accountant/Auditors. Yes, but we are not always consistent. Yes, to some degree but we are very re-active and need to do more here. No, not really. There is total reliance on the Managing Agent/Estate Manager/Accountants/Auditors No, not at all. Are all payments, expenditure or transfers out of the Reserve Account/Reserves approved by a resolution passed by the Trustees/Directors of the Community Scheme?ure items e.g. contractors, utility accounts, service providers, employees and ancillary items like debit orders, insurance premiums, bad debts and the recovery of insurance claims and/or the recovery of excesses from owners/lessees where applicable? * Yes. This is strictly complied with whenever reserves are utilised and is always approved at the AGM. Yes, but this is always formalised retrospectively. Yes, to some degree but we are tardy in getting this sanctioned/approved. No, not really. There is total reliance on the Managing Agent/Accountants/Auditors to see this is formalised. No, not at all. Are the utility and rates accounts of the Community Scheme i.e. the electricity, water, sewerage and rates and taxes being pro-actively monitored, managed and recovered from owners/lessees as and where required? * Yes. Rates, taxes and utility accounts are closely monitored - readings are regularly taken and usage closely monitored by the Trustees/Directors/Estate Management. Accounts are reconciled and payments and recoveries, where applicable are all up to date. Yes to a large degree. Accounts are kept up to date at all times. Variances are investigated/disputes and recoveries quickly resolved. Yes to a lesser degree. We rely totally on the Managing Agents/Developer/Estate Management/Accountants to scrutinise, monitor, pay, apportion and recover from owners/lessees. No, not really. Accounts are not consistently monitored, are often paid late due to levy collection arrears/cash resource issues/unresolved disputes. No. Despite our best efforts we experience endless problems and disputes with individual owners around charges apportioned to them/reading disagreements. No not really. Our monitoring is erratic, we regularly get surprises and/or are in dispute with the council/local authority/utility service providers. Not at all. The Community Scheme's utility accounts/rates and taxes are invariably in a mess and/or in arrears. The same applies to the recoverable amounts from owners/lessees. Do you know the state of accounts/the level of arrears owed by owners to the Municipality in respect of rates and taxes and services where applicable and/or amounts outstanding to bond holders? * Yes to a great extent. We try to proactively gauge/establish this as a matter of course given the potential impact on the Community Scheme Yes to some extent. We are aware of some properties/owners in arrears No not really. We regularly get surprises when summons are delivered/served on owners Not at all. We have no idea of the state of arrears of any owners/properties/have no idea how vulnerable we may be Have you assessed your potential liability or loss due to unauthorised actions, fraud or the theft of monies or assets belonging to the Community Scheme by the Managing Agents/Developer/Operator, Directors/Trustees/Estate Management and/or third parties? * Yes, we are acutely aware of this and have insisted on the Managing Agents/Third parties holding the required Professional Indemnity/Fidelity and/or Cyber risk insurance. We monitor all payments closely and insist on dual approval and release. Yes. We have tried to ensure that our Managing Agents/responsible or contracted third parties hold the appropriate Professional Indemnity and other insurance. We do still rely heavily on the integrity of our Trustees/Directors. Yes to a degree. We are heavily reliant on the credibility and management of reputable Managing Agents/responsible or contracted third parties and the integrity of Trustees/Directors, and the necessary insurance being held in the event of fraud/theft. No not really. We rely entirely on the integrity of all parties having access to bank accounts and payment systems and are very vulnerable here. No, not at all. Have no idea how vulnerable we may be. If you are human, leave this field blank. Submit
