Accounting for leaseholders' monies
Comments from ACCA
March 2003
Thank you for sending ACCA a copy of your letter dated 28 January, containing provisional versions of new regulations to be made under ss21 and 22 of the Landlord and Tenant Act 1985. I set out below ACCA's thoughts on the draft.
In Annex A - the regular statement of account - the only change we would suggest in respect of the balance sheet would be to provide for a special reserve fund, e.g. to pay for major projects such as decorating or refurbishment work.
In the draft service charge record, there should be an additional item under 'Income' for interest receivable.
In Annex B - the accountants' certificate - the main point we would make concerns the fourth procedure listed, viz to agree the amounts shown in the statement with the appropriate supporting schedules. The identity of the supporting schedules which are 'appropriate' for this purpose must be made clear at the outset so that the accountant is in a position to verify that he has referred to them. The other procedures listed, and the remainder of the statement, appear to be fine.
As regards Annex C - summary of tenant's rights and obligations - there are no major issues but we would make the following suggestions.
- In paragraphs 4 and 10, where the right of the tenant to withhold funds is
addressed, I suggest that the text states that the sum which may be withheld
is the equivalent of the charge levied during the accounting period concerned,
the point being that the actual service charge for the period will probably
already have been paid.
- In paragraph 9, the text should clarify that the landlord's responsibility
is to provide you/the reader with a copy of the certificate concerned.
- In paragraph 22, the text should make it clearer that the onus is on the tenant to exercise his rights by giving notice to the landlord.