In lamens terms: A body corporate may only authorize expenses that are stipulated / mandated per major structural items in formal LTMP . Member contributions may only be debited if there is a formal LTMP from which the contributions were derived. Capital expenses may not be deducted from LTMP provisions. Otherwise full prior consent must be gained from members for debits and expenses.
Confirmation by an auditor
“We agree with your interpretation below. In the December 2017 financial statements, we have noted the non-compliance with the Act on page 3 of the Audit Report, (but looking at our wording again, we should have specified more detail in this regard and will correct this going forward).”
The audit must certify that :
Expenses (Operational and reserve fund entries) were mandated per structural item, in a formal compliant long-term maintenance plan (Regulation 24)
Determined and debited contribution that was compliant with the act (Regulation 25)
Reserve fund specified for each major capital item as per act.(Regulation 26)
Regulation 24 state :
Maintenance, repair and replacement expenses must be funded from the operational budget as derived from an approved (LTMP)long-term maintenance plan. regulation 22
Reserve funds may only be used for maintenance, repair and replacement in accordance to the approved LTMP, with a provision for emergency repairs, in case of safety or where the it could not have reasonably be foreseen in the LTMP
Regulation 25 state:
(1) The body corporate must not later than 14 days after the approval of the budgets referred to in rule 17(6)(j)(iv) by a general meeting, give each member written notice of the contributions and charges due and payable by that member to the body corporate
(5) The body corporate must not debit a member’s account with any amount that is not a contribution or a charge levied in terms of the Act or these rules without the member’s consent or the authority of a judgment or order by a judge, adjudicator or arbitrator.
Regulation 26 states:
(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