Financial records, budgets, reports and audit
26. (1) A body corporate must—
(a) keep proper books of accounts that—
(i) record all its income, expenditure, assets and liabilities;
(ii) disclose all amounts recovered from members by the body corporate or any managing agent or other service provider acting on its behalf;
(iii) include individual accounts for each member; and
(iv) contain all other information necessary to allow members to assess the body corporate’s financial situation and their financial situation in regard to the body corporate.
(b) keep separate books of account and bank accounts for its administrative and
reserve funds referred to in sections 3(1)(a) and (b) of the Act;
(c) prepare annual financial statements for presentation at the annual general
meeting, which statements must include analyses of the —
(i) amounts due to the body corporate in respect of contributions, special contributions and other charges, classified by member and the periods for which such amounts were owed;
(ii) amounts due by the body corporate to its creditors generally and prominently disclosing amounts due to any public authority, local municipality or other entity for services including, without limitation,
water, electricity, gas, sewerage and refuse removal, classified by creditor and the periods for which such amounts were owed;
(iii) amounts advanced to the body corporate by way of levy finance, a loan, in terms of a guarantee insurance policy or otherwise, setting out the actual or contingent liability of the body corporate and the amounts paid by the body corporate and by any member in terms of such arrangement;
(iv) amounts in the reserve fund showing the amount available for maintenance, repair and replacement of each major capital item as a percentage of the accrued estimated cost and the rand value of any shortfall; and
(v) premiums and other amounts paid and payments received by the body corporate and any member in terms of the insurance policies of the body corporate and the expiry date of each policy;
(d) prepare a maintenance, repair and replacement plan in accordance with rule
22 for presentation at the annual general meeting;
(e) prepare budgets for the administrative and reserve funds comprising itemised estimates of the anticipated income and expenses during the next financial year for presentation at the annual general meeting; provided that such budgets may include discounts not exceeding 10 per cent of a members’ annual contributions applicable if all those contributions are paid on or before the due dates;
(f) prepare a report adopted by the trustees reviewing the affairs of the body corporate during the financial year for presentation at the annual general meeting.
(2) On the application of any member, registered bondholder or of the managing agent, the body corporate must make all or any of the books of account and records available for inspection and copying.
(3) The body corporate must ensure that all the body corporate’s books of account and financial records are retained for a period of six years after completion of the transactions, acts or operations to which they relate.
(4) Unless all the sections in the scheme are registered in the name of one person, the body corporate must present audited financial statements to a general meeting for consideration as soon as possible after the end of the financial year.
(5) The audit of a body corporate’s annual financial statements—
(a) must be carried out by an independent auditor who has not participated in
the preparation of the annual financial statements or advised on any aspect of the accounts of the body corporate during the period being reported on;
(b) need not be carried out in accordance with any recognised framework of
guidelines for financial accounting;
(c) must include opinions as to whether or not—
(i) the annual financial statements accurately reflect the financial position of the body corporate for the financial year under review, with such qualifications and reservations as the auditor considers necessary;
(ii) the body corporate has complied with the accounting requirements
set out in rules 21, 24 and this section, with a specific description of any failure to comply with such requirements;
(iii) the books of account of the body corporate have been kept and its funds have been managed so as to provide a reasonable level of protection against theft or fraud; and
(iv) the financial affairs of the body corporate appear to be effectively managed;
(d) must be completed within four months of the end of the body corporate’s