Body Corp Audit and Review templates - which one to use?


We have been asked by a couple of users recently for clarification around our Compliance template for Body Corps.

New Zealand has over 18,000 unit title complexes. There is a prima facie requirement for these entitles to be either audited or reviewed (Unit Titles Act 2010 S132), however a special resolution may be made at an AGM that this is not required.

There is increasing uneasiness in NZ around unregulated Body Corp managers - with changes to this sector becoming increasingly likely, for the requirement for audit becoming more likely, as with Real Estate Trust account audit. 

The reason why the Compliance template we made was framed as it is was because a user requested that we adapt our Real Estate template for the purpose of auditing the trust accounts of companies that provide Body Corp admin services (like Crockers, Body Corporate Admin (BCA), Strata and First Street). Strata for instance helps their clients sidestep the need for their own audit by having them pass a resolution that says:

“That section 132(2) of the Act does not apply to the Body Corporate for the forthcoming year but that all transactions of the Body Corporate are to continue to be made through the trust account of the Body Corporate Manager which is subject to audit, and that any interest earned be applied towards the cost of auditing the trust account, which is audited every two months.”

These larger managers tend to have good systems and appreciate the credibility that regular audit work gives them. It is the smaller operators that tend to avoid audit or review, and many body corp committees expose themselves to risk by thinking they are saving money by opting out of audit or review.

To clarify the purpose of this Compliance template we have updated the name of the compliance engagement as follows:


However to meet the needs of auditors engaged directly on the audit of Body Corporates themselves in terms of S132 of the Unit Titles Act 2010 we have created two new templates for both Audit and Review of Body Corporates.

Body Corporates have special requirements for financial reporting and some unusual aspects that require a specialised approach. Some of these are as follows:

  • They are legally "owners corporations"
  • The levies collected by owners are not subject to GST so even though "turnover" can be very high they may not have a GST registration requirement 
  • "Profit" varies considerably from year to year as funds are put aside for a long term maintenance plan, then may be spent in a large upgrade in one period
  • The Body Corp Committee is the governing body, and exercise a critical role in internal controls, approving and monitoring the budget and spending of the manager
  • The IRD treats them technically as Companies for tax purposes - required to file an IR4
  • The financial statements are Special Purpose in terms of the Unit Titles Regulations 2011 S32 - in practice many Body Corps are using the SPFR for FPEs standard issued by CAANZ



Our Audit and Review templates are designed for Special Purpose reporting (either SPFR for FPEs or general Special Purpose). The templates are based this on the current SPFR for FPEs templates but incorporating tests specific to Body Corp Financial Statements and checklists for the requirements of the Unit Titles Act 2010 and Unit Titles Regulations 2011.

Thanks to the firms that have brought this issue up and contributed some great ideas. Please try these templates and let us know if there is anything we can do to improve on them.

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