Reading Financial Statements

Financial reports are prepared on the Accrual basis of accounting where revenue and expenses are recorded when a transaction occurs rather than when the payment is received or made.  

Statement of Financial Position (Balance Sheet)

A Statement of Financial Position (Balance Sheet) provides an overview of what the Strata Company owns (including cash) and owes. They are separated into 3 categories:

Owner Funds:

Assets: Things owned by the Strata Company including money owed to the scheme by owners or external parties.

Liabilities: Things owed by the Strata Company – the most common liability is unpaid supplier invoices. 

**Additional Note:

Unallocated Funds

Stratafy does not generated all levies for the financial period in advance. When all payments have been allocated to available levies/invoices on the owner ledger, any additional funds paid by owners will sit as Unallocated Prepayment on their respective owner ledger.

This amount is neither allocated to Admin nor Reserve Funds as there is no unpaid levy on the system for allocation. In this circumstance, they will be reported as Cash at Bank – Unallocated (as an Asset) and Prepaid Levies – Unallocated (as a Liability).
 

Statement of Financial Performance (Income & Expenditure Statement)

This report is a statement of all the income and expenditure of the Strata Company for the financial period. It provides an overview of spending in different budget categories. The report shows 3 columns for comparison purposes (Current Year Actuals, Current Year Budget, Previous Year Actuals). 

Where a Strata Company is registered for GST, the amounts in this report will exclude GST. 

Income
This is primarily made up of levy contributions that have fallen due (not necessarily collected) during the financial period. Income may also include costs that can be recovered (electricity, debt recovery, keys, etc.) and any other revenue that the Strata Company has collected during the year.

Outstanding levies that have fallen due during the financial period are included as income in this report and can be identified on the Statement of Financial Position (Balance Sheet) as Receivables.

Expenditure
All expenses for the Strata Company that have been incurred during the financial period are categorised in accordance with the relevant budgeted line items. Unpaid invoices are included as expenditure in this report and can be identified on the Statement of Financial Position (Balance Sheet) as Creditors—Other.