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Immediately following the 2013 AGM, I had the following interaction with the Financial Auditor of our crosslease, which reveals further issues with the way payments to our building manager have been mis-handled and the true employment benefits mis-represented:

From: Christoph Paszyna
Date: Mon, 18 Nov 2013 09:47:52 +1300
To: Johan Theunissen (Auckland Chartered Accountants Ltd.)
Subject: Audit of Cross Lease 9 Sarawia St, Newmarket

Hi Johan,

I just spoke to Megan at your office, who gave me your e-mail contact to address you with the matter described in attached file audit.pdf. The other attached PDF is just supplementary information.

With kind regards,
 Christoph Paszyna


Naturally, our Auditor has to tread carefully and he won't bite the hand that feeds him. To understand his position, you need to discern the subtleties in his statement. This is what our Auditor had to say in reply:

From: Johan Theunissen
Date: Tue, 26 Nov 2013 17:06:35 +1300
To: Christoph Paszyna
Subject: PAYE and Caretaker's Flat

Hello Christoph,

Thank you for your e-mail and attached documentation. The monthly PAYE on a salary of $1,055.80 ($829.73 + $226.07) excluding any other taxable benefits is $110.85. The actual monthly PAYE deductions were $226.07. The difference converts into a gross rental benefit of about $150.00 per week, which I agree is not reflective of the market rent for the caretaker's flat. The difference in PAYE if the rent is taken at $360.00, would be $1,800.16 more PAYE payable. This amount is less than our pre-determined audit materiality amount and therefore not considered as a material error.

The disclosure of the total "cash" package to the caretaker should be done by way of a note to the financials which will be added. The actual value of $18,720.00 ($360.00 x 52 weeks) will not be an item in the income statement because it is not "paid" or "received". It is a value put on the benefit of having a unit at no cost and the correct treatment is just by increasing the taxable remuneration to calculate the correct PAYE payable.

I agree with you that the total "cash" package of the caretaker should be disclosed to unit owners, either by way of inclusion in the Minutes of AGM or by way of a note to the Financial Statements. The latter path to be followed for this year.

I trust that this explanation will answer your concern in this regard.

Regards, Johan Theunissen
AUCKLAND CHARTERED ACCOUNTANTS LIMITED


In essence, our Auditor confirmed that These 2 "errors" mean that YOU (the owners) have been mis-informed about the true "total employment benefits" of our building manager and IRD had been under-paid in PAYE taxes.

The Auditor has obviously reported back these findings to the BCA accountant before the completion of his audit on 16.12.2013. In theory, both "errors" should now no longer be present in our accounts. Unfortunetely, while you may have discovered the new "Note 8" in the "2012/2013 audited annual accounts" sent by BCA on 4.3.2014, the numbers themselves have not been corrected (e.g. they still say "Rent received: Caretaker's Flat $6,616" in the statement of financial performance).

In summary: if you look at our Auditor's report and only see the standard statement that "In our opinion, the financial statements of Sarawia for the year ended 30 September 2013 are prepared, in all material respects, in accordance with requirements of the Cross Lease", that really only means: the mistakes are excusable and not a matter between him and our Cross Lease, but an internal matter for us. The Auditor's hint to look out for is on the final section of the Auditor's Report: "Without modifying our opinion, we draw your attention to the Notes to the financial statements...".

Please read and understand Note 8! While YOU were made to believe from our 2012 accounts that the "total gross employment benefit" to our building manager was $20,299.17, you can now see that this number practically doubled to $39,703.29 in our 2013 accounts, while Graham Smith made the ridiculously untrue statement at our 2013 AGM that "it's just a catch-up" for the 2% and 1.58% CPI increases of the previous 2 years.

Despite promises by a member of the Owners Committee (Catherine Byrne) at the 2013 AGM that the Manager-pay issue will be worked through, my detailled descriptions of the issue on the related Manager pay page from February 2014 has still not been replied to by the Owners Committee. Apparently, they only met once during the year.