Budgets

For The Scrap Heap This Week – Statements Of Key Financial Information

This article challenges the necessity of NSW strata laws requiring summary financial statements, arguing that they duplicate existing work without adding value. Instead, it advocates for full financial statements at AGMs to promote transparency and trust while questioning whether outdated regulations should be scrapped or retained.

By
Michael Teys
on
February 22, 2025
Category:
Governance

In previous articles in this series, I have argued for the scrapping of laws about maintenance plans (instead imposing minimum contribution to capital works as a percentage of a buildings value) and conflict of interest disclosure (instead relying on the common-law and the Crimes Act secret commission provisions). This week I take the razor to summary statements about financial statements.

Repeal section 92 - statements of key financial information

This section of the NSW strata laws requires a summary of the financial statements to be sent with the AGM papers. It’s a classic solution in search of a problem. It replicates the work done by strata managers in presenting financial statements for no real benefit. A key financial statement can replace full financial statements for an AGM. But a competent strata manager would not hold back the full set. A full set of documents is a must for these meetings. Anything less breeds distrust. 

What do you say, scrap or stay?

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Michael Teys

Michael Teys is the Founder and Chairman of The Strata Professionals Australia. He brings together more than 30 years of specialist strata law practice, a decade of strata business ownership, and an active programme of academic research into multi-owned property governance.