Service Charge Accounting

Whilst not a statutory requirement, many landlords have service charge accounts prepared on a regular basis.

This may be due to a clause in the lease agreement making it a legal requirement, or as best practice for properties managed by a member agent of RICS or ARMA with variable service charges.

Due to terms in the lease, or as best practice, the service charge accounts may also need to be signed off by a practicing accountant through a report of factual findings. This provides assurance to tenants that their service charges are being used as per the terms of their lease.

Section 21 Requests:

If leaseholders make such a request, landlords are legally required to provide

information relating to:

- the service charges of the tenant,

- any associated service charges, and

- relevant costs relating to service charges

This report must be signed by a registered auditor which can prove costly.

Therefore, landlords often prepare service charges accounts with a report of factual

findings as it can provide all the information and assurance tenants look for.

Factual Findings Report

Nasa can complete a factual findings report to accompany your service charge accounts.

This will give tenants the reassurance they need that an independent accountant has verified the information.

Your dedicated client manager will work with you to provide:

• A factual findings report
• Signed off by a practising accountant
• Prepared in line with best practice guidance

This work will include:

• reviewing your lease agreement to gain an understanding of its requirements.
• Completing comprehensive checks on the prepared accounts and comparing these to the allowable expenses included to your lease agreement.
• completing a full reconciliation of your balance sheet to ensure the accuracy of your accounts

Service Charge Accounting

We are also able prepare service charge accounts for landlords, managing agents, Right to Manage Companies and Residents' Management Companies.

This includes much of the work involved in the report of factual finding as well:

• Preparing the service charge accounts directly from your records or accounting software
• Adjusting figures so service charge receipts and expenses are recognised in the correct period
• Accounting for transfers to reserves for sinking/emergency fund

Reserve and sinking funds:

Tenant funds must be held in trust until utilised, and as trustees you may have a duty to generate returns on these funds to benefit the tenants.

These returns may have to be declared to HMRC via a trust tax return which we can also help with