Question 1

Auditing Accounts and Changing Managing Agents

Accepted Answer

Q: One of our directors has suggested that she could audit our annual accounts for the AGM and save us £300 pa. However in our lease it states that the accounts have to be certified by a competent chartered accountant and she is a MAAT and has been a member of the Association of Accounting Technicians for 25 years. We are not sure if she is qualified to audit our accounts. Four of the directors are far from happy with our Management Company and would like to change to one that has been recommended. Do we need all Directors to agree to change or just a majority? FPRA Chairman Bob Smytherman replies: Thank you for your queries which have been passed to me me for a response from a practical point of view as an RMC Director myself. The question about one of your Directors taking on the accounts auditing , we have passed this to our Specialist Hon Consultant for the technical and legal response but my practical response would be consider this very carefully and how this would look to other shareholders contributing to the service charge account. If the individual can demonstrate that they can carry out the work competently then I would suggest they tender for the contract and the Directors put your recommendation to the AGM to appoint auditors. It may if she is awarded the contract to do the accounts after the tender process and due diligence it may be advisable for her to resign as a Director to avoid any conflict of interest. On the second point about replacing managing agents providing it is the Company that employ the agent and not a separate freeholder which is common with many leases then it would be the Directors to run the Company which would include appointment of agents. Decisions such as this are always best when a consensus reached without the need for a 'formal' vote, however strictly speaking it would require a simple majority of the Directors to terminate the agents contract and to engage a new one. My own view is that such important decisions as this affecting the whole membership of the Company is that Directors need to discuss this and make a recommendation to an AGM for all shareholders to vote on. This has the added benefit of being more inclusive and getting shareholders to take responsibility for decisions of the Company. If the Board of Directors are divided on the need to change at all this could be put to an AGM as a simple suggestion if the consensus is to change the Directors would be mandated by the shareholders to seek alternative management or it may be a case of simply holding the existing management to account giving them clear notice to improve along with timescales before taking the 'nuclear' option to remove them altogether which can also be divisive. [submitted March 2016]

Question 2

Auditing Accounts and Changing Managing Agents

Accepted Answer

Q: One of our directors has suggested that she could audit our annual accounts for the AGM and save us £300 pa. However in our lease it states that the accounts have to be certified by a competent chartered accountant and she is a MAAT and has been a member of the Association of Accounting Technicians for 25 years. We are not sure if she is qualified to audit our accounts. Four of the directors are far from happy with our Management Company and would like to change to one that has been recommended. Do we need all Directors to agree to change or just a majority? FPRA Chairman Bob Smytherman replies: Thank you for your queries which have been passed to me me for a response from a practical point of view as an RMC Director myself. The question about one of your Directors taking on the accounts auditing , we have passed this to our Specialist Hon Consultant for the technical and legal response but my practical response would be consider this very carefully and how this would look to other shareholders contributing to the service charge account. If the individual can demonstrate that they can carry out the work competently then I would suggest they tender for the contract and the Directors put your recommendation to the AGM to appoint auditors. It may if she is awarded the contract to do the accounts after the tender process and due diligence it may be advisable for her to resign as a Director to avoid any conflict of interest. On the second point about replacing managing agents providing it is the Company that employ the agent and not a separate freeholder which is common with many leases then it would be the Directors to run the Company which would include appointment of agents. Decisions such as this are always best when a consensus reached without the need for a 'formal' vote, however strictly speaking it would require a simple majority of the Directors to terminate the agents contract and to engage a new one. My own view is that such important decisions as this affecting the whole membership of the Company is that Directors need to discuss this and make a recommendation to an AGM for all shareholders to vote on. This has the added benefit of being more inclusive and getting shareholders to take responsibility for decisions of the Company. If the Board of Directors are divided on the need to change at all this could be put to an AGM as a simple suggestion if the consensus is to change the Directors would be mandated by the shareholders to seek alternative management or it may be a case of simply holding the existing management to account giving them clear notice to improve along with timescales before taking the 'nuclear' option to remove them altogether which can also be divisive. [submitted March 2016]

Auditing Accounts and Changing Managing Agents

Search

Articles Archive