First things first, when we are referring to an Audit, we mean a Certified or Chartered Accountants Audit.  Their role is designed to protect the payers of the service charge, the Tenants.  They should verify and certify expenditure by completing a full review and appropriate checks, providing the Tenant’s with the assurance that things have been handled properly.

Sadly, our experience is mixed at best.  Often a limited and superficial review is undertaken, mistakes are made and yet the certificate is signed off.  In many cases, the certified sign-off is qualified by comments that render the statement almost meaningless.

Added to this ongoing concern, the current difficulties related to Covid are being used as justification for a less than comprehensive check, and no doubt this will lead to increasing errors and oversights.  For example, a recent statement included a qualification of: “we have been unable to carry out our standard invoice testing and verification…as the invoices are currently unavailable”.  Instead, they “carried out a sense check and review of an expenditure listing”.  Despite the limitations of their work (and the lack of protection offered), the fee remained the same.  In the same week, we had another auditor sign off an unexplained historic claim for almost £80,000 that was supposedly missed in earlier years.  We pressed and pressed for details.  In the end, the claim was completely wrong.  I don’t know what checks the Auditor completed before signing that off.

Our concern is that we are finding errors on a weekly basis and take no assurance from the Audit process.  Put simply, the Tenants cannot rely on that alone. 

So, why have service charge expenditure audited … is there a better way?

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