The ICAEW technical guidance [TECH 09/14BL] came into effect on 1 April and is a step in the right direction in the completely unregulated area of commercial service charges.
Unlike residential property service charges, commercial charges are not regulated by overriding national legislation and property owners and managers are encouraged to follow ‘best practice’ as covered by the RICS Code of Practice.
The lack of regulation has meant that commercial service charges have not been properly accounted for and in many cases failed to provide occupiers with the comfort and certainty that the accounts produced represent a true and accurate record of the expenditure incurred by the owner.
Last year the Institute finally published a technical release to address some of the issues around financial reporting of commercial service charges. The guidance became effective from 1 April 2014 and must be adhered to by accountants signing off accounts produced after 31 March this year.
Service charge reports prepared by an accountant should now contain information on the accounting principles, accruals, sinking funds and deposits. Material misstatements should also be reported by the accountant.
For further information please contact Lesley Malkin.
