Building containing 3 apartments - need audited accounts?

D

dstanley

Registered User
Messages
28
I am currently living in a building which has 3 residential units. The builders want to resign as directors of the management company and set each owner up as a director.

We are wondering if Revenue will require we audit our accounts for the company? We pay a maintenance fee of 900 per year so the management company will only take in about 2700 per year.
 
"I am currently living in a building which has 3 residential units. The builders want to resign as directors of the management company and set each owner up as a director.

We are wondering if Revenue will require we audit our accounts for the company? We pay a maintenance fee of 900 per year so the management company will only take in about 2700 per year."

I want to dissect this query.

"I am currently living in a building which has 3 residential units."

I think this means the following:

I bought an apartment in a property. There are two other apartments. I hold the title to the apartment under a long Lease. As do the other 2 owners. There is a management company and it holds the freehold interest in the overall building.


"The builders want to resign as directors of the management company and set each owner up as a director."

When set up, the management company comprised the builders. Now that the property is up and running, they do not want ( why would they?) any further involvement. It is for the three apartment owners to deal with.

"We are wondering if Revenue will require we audit our accounts for the company?"

They will require accounts. This should all have been clear to you when you bought the property. In a large development, an agent will normally look after everything. In a very small development like this, it must be clear to the property owners, that the onus of running the management company will ultimately fall on them.

"We pay a maintenance fee of 900 per year so the management company will only take in about 2700 per year."

If you are going to do this properly ( and you should) then unless one of your number is an Accountant then you are all going to have to pay whatever it costs to set the system up and you are very likely going to be forking out more than 900 each. However once it is set up, you will more than likely be eligible for an audit exemption.

You should talk to your own solicitor and s/he should be able to steer you in the right direction.

mf
 
This company is up and running so there are no set up costs. It is just a change of directors and the builders solicitors will take care of all the legal work in doing this but the charge will probably come out of the company account money.
It was probably written in to the contract you signed first day that you become a shareholder in this company so you may not have a choice and it is probably the best thing to do as it gives you control over your charges.
As already said, apply for an audit exemption as this will reduce your costs each year.
 
im pretty sure that a company limited by guarantee cannot opt for audit exemption.
 
We are wondering if Revenue will require we audit our accounts for the company?
Click to expand...

The obligation to audit accounts has nothing to do with Revenue but is a statutory duty under the Companies Acts and administered as such by the CRO.

mf1 said:
If you are going to do this properly ( and you should) then unless one of your number is an Accountant then you are all going to have to pay whatever it costs to set the system up and you are very likely going to be forking out more than 900 each.
Click to expand...

If an audit is necessary (which will automatically be the case if the company is limited by guarantee) it cannot be undertaken by anyone connected to the company, eg a shareholder, director or someone related to them. It must be done by an independent party who is a registered auditor. The ODCE actively pursue breaches of these rules.

Niall M said:
im pretty sure that a company limited by guarantee cannot opt for audit exemption.
Click to expand...

Yes -this is the case
 
dstanley said:
We pay a maintenance fee of 900 per year so the management company will only take in about 2700 per year.
Click to expand...

With the increased complexity of auditing standards, and rigid regulation of auditors by the various Institutes, the company could well end up spending the entire €2700 on its annual audit. This clearly makes no sense. It might be worthwhile investigating whether it would be feasible to have the company dissolved and replace it with some sort of partnership agreeement between yourself and the other 2 owners. This would be much easier to administer and you could actually do the accounts & other ongoing paperwork yourselves if you wish - perhaps reducing the admin costs to zero!
 
ubiquitous said:
With the increased complexity of auditing standards, and rigid regulation of auditors by the various Institutes, the company could well end up spending the entire €2700 on its annual audit. !
Click to expand...
But if you apply for Audit Exemption as previously suggested this will not be the case.
Having that said I agree that a simpler arrangement would be better. I do not see the need for a company in the case of 3 units. We have a unit that is one of 4 and do not have a company. We have a bank account which pays the ESB bill and when we need to do something such as painting we just all deposit an equal amount in the account.
No tax and no fees involved.
 
I have just signed papers applying for audit exemption for a number of limited companies.
Are you telling me that my accountant has got it wrong or am I missing something in this conversation.
 
woods said:
I have just signed papers applying for audit exemption for a number of limited companies.
Are you telling me that my accountant has got it wrong or am I missing something in this conversation.
Click to expand...

Not necessarily. Companies can be audit exempt subject to turnover and other criteria.

Companies Limited by Guarantee cannot be audit exempted.


p>
 
You must log in or register to reply here.
Back
Top