Treasury and financial procedures policy

Policies
Written By Simon Lambourne

Body Corporate 178796 (Freemans Park)

July 2024

 

Purpose and scope

The policy has been developed to enable Body Corporate 178796 (Freemans Park) to ensure the following:

  • Maintains sufficient liquidity for Operational expenditure.

  • Maintains sufficient liquidity for Long Term Maintenance expenditure.

  • Maintains a prudent Contingency fund.

  • Funds are invested in investments that have a minimal risk profile.

  • Appropriate financial delegated authorities to assist with effective financial management.


Responsibilities

The Body Corporate is responsible for the policy that governs the management of its finances and associated risk. These risks can include the following:

  • Interest rate fluctuations.

  • Inflation.

  • Fluctuations in liquidity including collection of levies.

  • Counterparty risk.

  • Aging buildings and deferred maintenance.

Management of the Body Corporate will be carried out as per the attached Delegated Authority Schedule and the Table of Responsibilities.


Cash management

The cash requirements of the Body Corporate will be managed as per the Delegated Authority Schedule and the Table of Responsibilities.

All information is to be provided in a timely manner and on the basis of a “no surprises” regime as far as is practicably possible.

Cashflow forecasts are to be maintained and the various subcommittees will work together to ensure that the forecasts are as accurate as possible.


Working capital, contingency and reserve funds

Levies are to be collected as per the requirements of the Unit Titles Act and are to ensure that the following requirements are met:

  • Sufficient levies collected to cover working capital requirements for the year.

  • The working capital reserves are to be replenished to an amount that is equivalent to 2 months expenditure for the financial year.

  • Sufficient levies are collected to enable planned expenditure for long term maintenance can be carried out including an adequate contingency allowance for unexpected items.

  • The long-term maintenance fund reserves are to be maintained as per the requirements under the Act.

All funds are to be held in cash, in New Zealand, in NZ$ and held in bank accounts with one or more of the following New Zealand Registered Trading Banks: ANZ, ASB, BNZ, Kiwibank and Westpac (Approved Banks).


Approved Bank Accounts and Funds Management

Funds are to be held in either cheque accounts, savings accounts, oncall accounts or term deposits.

All payments from the bank accounts must be authorized by two approved account signatories and as per the delegated authority.

Bank accounts must be held in the name of Body Corporate 178796 or professional trust accounts designated as Body Corporate 178796 funds only. They are to be held on trust and cannot be used or applied to any other entity.

Interest-bearing savings or on-call accounts are to be used to hold surplus cash that can be readily accessed should the funds be required in the short term.

All interest received from savings, on-call accounts or term deposits shall be applied to the Long Term Maintenance fund.

Long Term Maintenance funds cannot be used for any other purpose other than long term maintenance expenditure.

Where practical Long Term Maintenance funds can be held on term deposit and the following guidelines are to be applied:

  • Cashflow forecasts should be reviewed and deposits aligned accordingly.

  • Term deposits should be split into equal amounts and the maturity dates spread .

  • At least one deposit is to be maturing each quarter.


Borrowing and trade credit

The Body Corporate shall not borrow funds including (but not limited to) from banks, owners or creditors. An exception to this from this is any requirement to fund insurance premium on a monthly basis which is generally a form of a loan. This will require approval from the Body Corporate Members at either an AGM or an EGM.

The Body Corporate will adhere to the payment terms set by suppliers.


Payment Authority

Payments are to be approved in line with the Delegated Authority Schedule and the Table of Responsibilities.

Any payments to Body Corporate Committee members must be authorized by resolution of the Body Corporate Committee (for the avoidance of doubt the delegated authority of the Chair of the Body Corporate Committee, Chair of the Finance Governance and Legal Sub-Committee and Building and Grounds Manager does not apply in this instance).

Any payments to Body Corporate Unit Owners must be authorized by resolution of the Body Corporate Committee (for the avoidance of doubt the delegated authority of the Chair of the Body Corporate Committee, Chair of the Finance Governance and Legal Sub-Committee and Building and Grounds Manager does not apply in this instance).

Any payments to the Body Corporate Administrator must be authorized by the Body Corporate Committee.


Payments

All payments shall be authorised in compliance with the following rules:

All payments are to have been approved in line with the Payment Authority Policy.

All payments shall be authorized by two approved account signatories.

When a payment is authorized, the person completing the authorisation shall have the full details of that payment available to them at the time they authorise the payment.

No person may authorize a payment for which they are the payee, a related party to the payee or an associated person to the payee (the exception to this is the approved payment of the Body Corporate Administration fee).

No person may authorise a payment to a person that they report to.


Online payment and accounting security

All banking systems must be secured with multi-factor authentication for the authorization of any bank transactions.

All accounting systems must be secured with multi-factor authentication.

Independent evidence and verification procedures must be used to validate the bank account of any new payee or any change of payee bank account. This should involve information sourced independently (ie google website search for phone numbers) and telephone calls to verify bank account details.

Any person involved in the processing of invoices for payments or the authorizing of bank transactions must be provided with regular training about scams (including but not limited to email, invoice, online etc), phishing and malware.

Users must not share their online banking passwords with any other person or use it as a password for any other website or system.

All email accounts used by any person involved in or as part of the payments processing and approvals process must be secured with multi-factor authentication.


Authorised signatories

The Body Corporate Manager is responsible for authorising transactions on the bank accounts and ensuring that they are authorised in accordance with the Payments Policy and the Online Payment and Accounting Security Policy


Payment of levies

Levies are to be raised in accordance with the AGM approval each year.

Interest will be charged on late payments in accordance with the AGM approval each year.

Arrears are to be managed in accordance with the Debt Collection Protocol (attached).

Where there is financial hardship the Finance Governance and Legal committee may consider payment plans providing levy arrears are paid in full prior to the next levy call.


Debt write-off

To help ensure efficient and effective management of the Body Corporate, the Body Corporate Committee shall have the authority to approve a write-off of any Owners debt to the Body Corporate that is an amount less than $1.


Reporting between AGM’s

The Body Corporate Manager shall provide the following reports to the Finance Governance and Legal Subcommittee on a monthly basis:

  • Month end financial accounts

    Year to date financial accounts

  • Bank account statements and reconciliation

  • Graphs for water and electricity usage

  • Schedule of invoices

  • Schedule of overdue levies including a breakdown of portion of Operating Fund levy and Long Term Maintenance Levy

The Finance Governance and Legal committee shall provide the following reports to the Body Corporate Committee on a monthly basis:

  • Month end financial accounts

  • Year to date financial accounts

  • The Body Corporate Manager shall respond to all Body Corporate Committee members’ questions and enquiries in relation to the Body Corporate’s financial management in a timely manner.


Policy review

Policy, delegated authority and responsibility schedules shall be reviewed annually with the next review being due in September 2025.


Delegated authority schedule and table of responsibilities

Delegated authorities

  • Job title

  • Authority

  • Reference

  • Chair


Chair FGL

  • Pay monthly bills

  • Eddie

  • Bca

  • Pay utilities

  • Committee


Table of responsibilities

Body Corporate Manager

  • Management of bank accounts.

  • Management of investments.

  • Provision of financial reports.


Finance governance and legal committee

  • Ensuring that the finances are managed in accordance with this policy.


Property Manager

  • Ensuring that all invoices are provided to the Body Corporate Manager in a timely manner to enable payment within required timeframes.

 
Simon Lambourne
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