We are pleased to introduce Chartered Accountant Nick Basra who specialises in advising Managing Agents in the preparation of Service Charge accounts.
What do the service charge accounts communicate to you?
When you next receive your service charge accounts, look out for these key features and boost your knowledge understanding them. It isn’t all about the numbers as this blog will show you.
Financial performance
The income and expenditure schedule shows whether there is a surplus or deficit for the period.
A deficit occurs when service charges billed are lower than budgeted expenditure for services & works incurred. Conversely, a surplus occurs when service charges billed are greater than the budgeted expenditure for services & works incurred.
When setting the next budget, your Property Manager will refer to the latest accounts and review the financial performance. This helps them to identify changes & trends in cost headings and review value for money.
Financial position
The balance sheet shows the assets, liabilities and reserves at a specific point in time (being the period end date). It is important to remember this is a historic snapshot and not indicative of the financial position today.
Accountant’s Report
The Accountant’s Report shows that the accounts have been objectively examined by a firm of qualified accountants, unconnected to the Managing Agent. There is an outline of the work performed inline with best practice such as reviewing accounting records, bank statements & invoices. Ultimately this provides a level of comfort to users of the accounts.
Notes to accounts
The notes can be found at the end of the service charge accounts. They include bank account details of where the service charge funds are held and information on the basis of accounts preparation (e.g. fundamentally accruals not cash).
This guest blog is brought to you by Nick Basra, a Chartered Accountant at Block Accountants, who assist Managing Agents. Nick is also a leaseholder and cares about raising standards. www.blockaccountants.co.uk