Surplus and deficit
Operators must carry forward any surplus to the accounts for the next financial year. A surplus stays in the village accounts and is available to offset costs in the following year.
If there is a deficit in the village accounts, the operator must fund the shortfall from the operator's own resources so that the accounts are brought to zero, unless the deficit results from:
- an increase in rates, taxes or charges in respect of the village or village land
- an increase in wages or salaries payable to village staff under an award
- an unforeseeable increase in costs of utilities or essential services other than telephone or internet
- an increase in insurance premiums not caused by any unreasonable action or omission of the operator
- increased costs reasonably necessary to maintain and operate the village because of an extraordinary event not caused by any unreasonable action or omission of the operator.
If the deficit is not the result of any of the five exceptions above, the operator must not:
- carry the deficit forward to a subsequent year
- request any special additional payment from residents to cover it
- increase maintenance charges to cover it
- use maintenance charges already collected in the year to cover it
- use the capital maintenance fund to cover it.
These protections mean residents cannot be billed for a deficit, either directly or through higher maintenance charges
If an operator carries forward a deficit under one of the exceptions, residents should be informed at the annual meeting.
Annual financial statement
At each annual meeting the operator must present a written financial statement covering:
- the sources of income received from charges for goods and services in the previous financial year
- details of expenditure on goods and services for the village in the previous financial year, including the amounts spent and what they were spent on
- details of payments into and out of the capital maintenance fund in the previous financial year
- estimated expenditure on goods and services for the current financial year
- details of any proposed increases in maintenance charges
- details of any special levies proposed.
Any proposed maintenance charge increase or special levy requires a special resolution from residents before it can take effect.
The annual meeting is the opportunity for residents to ask questions about these proposals before voting on them.
Penalties apply for failing to present the financial statement.
Solvency declaration
At each annual meeting the proprietor must present a signed written statement covering:
- whether all repayable entry payments and exit entitlements due in the previous financial year were paid
- if any repayable entry payments were not paid when due, the amount unpaid, details of the delay, and the reasons
- whether the proprietor is aware of any material matter that may prevent the proprietor from meeting debts as and when they fall due in the 12 months from the end of the previous financial year, and if so, the details of that matter.
The solvency declaration gives residents advance warning of any financial difficulty that could affect payment of exit entitlements in the coming year.
Penalties apply for failing to present the solvency declaration.
Annual review of the financial statement
After the end of each financial year and before the next annual meeting, the operator must arrange for the financial statement to be reviewed by an independent person who is a member of, and holds a current practising certificate from, CPA Australia, the Institute of Public Accountants, or Chartered Accountants Australia and New Zealand.
The review report does not need to be presented at the annual meeting, but residents may ask to see it.
Full audit
Residents may resolve at any meeting, by special resolution, to require the financial statement to be fully audited. An audit may be required even if a review has already been completed.
The auditor must be a registered company auditor, a firm of registered company auditors, a qualified accountant authorised by their professional body to conduct audits, or a person approved by the Director.
A full audit involves a more thorough examination of the village's financial records. Residents should consider seeking a full audit if they have concerns about how village funds have been managed.
If residents resolve to require an audit, the operator must convene a meeting as soon as practicable after receiving the audit report and present the report and the financial statements to residents at that meeting.