Management
Fund (S39 (1))
- Management
Corporation shall, at a general meeting, determine amounts
reasonable and necessary to be raised by contributions for
meeting actual or expected liabilities incurred or to be incurred
in respect of:
- Maintaining
and keeping in a state of good and serviceable repair
of common property and other property
- The
common expenses of the management corporation
- Premiums
payable on insurance policies
- All
other liabilities incurred or to be incurred during that
period
Sinking
Fund (S39 (2))
- Management Corporation shall, at a general meeting, determine
amounts reasonable and necessary to be raised by contributions
for meeting actual or expected liabilities incurred or to be
incurred in respect of:
- Painting
or treatment of common property
- Major
repairs and improvements and maintenance of common property
- Any
other liabilities approved by Management Corporation in
General
Meeting
Generally,
excluding urgent Repair and Maintenance expenditure, all income
and expenditure are pre-determined.
This
means that Management Fund rate is fixed and contractual expenses
are known.
Management
Corporation, together with Managing Agent has to work out an
operation budget for Management of Funds.
If
MCST does not pay major contractors on upon due and payable,
expenses will
be accrued as liability. In this situation, MCST will show a handsome cash
balance in bank.
Therefore,
large bank and or Fixed deposit balances do not always reflect
the true position of the MCST unless read in conjunction with
the liability accounts.
A
management corporation shall not disburse any money
- (S38 (3))
From Management Fund other than for the purpose of meeting
its liability referred to in S39 (1)
- (S38 (6))
From its Sinking Fund other than for the purpose of meeting
its liability referred to in S39 (2)
- From Management
Fund to Sinking Fund otherwise than for the purpose of carrying
out its powers, duties and functions under this Act or by law
Investment
of surplus funds
- Management Corporation may only invest any moneys in any manner
permitted by law for the investment of trust funds (S38 (7))
- Management Corporation may also invest any moneys in an account
established with a financial institute in the name of the Management
corporation.
- It is quite safe to assume that the bank account should hold
enough funds to pay off 2-3 months of contracted expenses. Any
surplus on top of this amount can be invested. In reality, Fixed
Deposit is common mode of investment.
Common
Errors in MCST Accounting
- Legal fees
incurred/recoverable :
- Charge
according to resolution passed in the AGM.
- Pay
attention to legal costs incurred supposed to bear by
the Subsidiary Proprietor should be recovered.
- Long outstanding
items
- Long
outstanding Balance Sheet items proved to be non-exist
should be written off upon approval in Council Meeting
- Example
are over provision of accruals, unidentified renovation
deposits, etc.
Cautions
- Accounts
should always be updated periodically and supported with relevant
schedules.
- Where
necessary, budgets should be prepared and incorporate into
the financial statements as a value-added service to customers.
- All
accounting & other
important data must have a backup copy. Backup procedures
should be practiced periodically and copies should be kept
offsite.
- You
will never realize what you’ve lost until it’s
gone.
- For security
reason, set access passwords to protect data.
- Accounts
staff must read ALL minutes of meetings to properly account
for certain resolutions affecting the financial position
e.g. certain expenditure may be resolved to be out of SF but accounts staff may post it to MF
instead
- Hard copy
of accounts should include all transactional entries and essential
financial statements filed in month sequence
- Basic internal
controls
- Control
on cash collections
- All
payment vouchers must be authorized and supporting documents
stamped
with “PAID” to avoid double payment.
- NEVER practice
use of cash cheques
