It is officially time for all living communities to achieve best practices for their long-term financial stability & prosperity. Towards this, ADDA returned almost after 2 years of COVID with an offline workshop on ‘Financial Governance for Communities’.
It was held on 7th May 2022 in Teri Auditorium, Domlur, Bengaluru.
A panel of community management experts offered result-driven practices, and practical insights, and busted popular myths on Financial Governance throughout the interactive workshop.
Here’s what our key speakers talked through:
- San Banerjee, Co-founder & CEO, ADDA, tackled the ‘Top Myths Busted About Community Finances and Accounting’.
- Sunil A, Sr. Product Specialist, ADDA, explored ‘GST & Taxation Checklist for Communities’.
- Rahul Raj, Treasurer, Shanthi Nagar Residents’ Association, discussed ‘Financial Governance and its Importance in Communities’.
- Iswar Dixena, Management Committee, Prestige Sunrise Park Birchwood led ‘A Walkthrough on Setting Up Your Finances During Builder to Association Handover’
Key Workshop Takeaways
“This is where it gets technical,” San starts off smiling. Some of the major takeaways from her keynote are as follows –
1. What is the role of RERA in society budgeting?
At the beginning of every financial year, every community must do its budgeting and send it to RERA for approval. Only then, error-free maintenance invoices can be issued.
2. Points to Note on Builder-Association Handover
- Once 51% of units are sold, the builder must register an Association under the Apartment Owners Association (AOA) Act.
- If not done, at least 7 or more members can form it under Karnataka Societies Registration Act 1960.
- Post this, the Association must have deemed conveyance to name the land after their society.
3. Fundamentals of Billing & Accounting Operations
- Categorize apartment maintenance charges on line items based on day-to-day & mid/long-term expenses.
- Use best billing practices to ensure healthy cash flow and greater interest income in your Association
- Go for the golden rules of accounting for seamless year-end auditing.
4. Financial Prosperity – Community Hierarchy of Needs
Every Association must diversify finances and not be dependent on maintenance collections alone.
- You can save up to 40% of repair & breakdown costs by preventive asset maintenance.
- Go for other investment options than FDs like bank bonds for higher returns.
Much like Maslow’s hierarchy, the MC should take note of ADDA’s community hierarchy of needs below –
- Official communication forum for respected communities.
- Financial transparency in billing and accounting.
- Total no-nonsense gate management for security and privacy.
- Existing facility monetization like the clubhouse for higher revenue.
- Vendor services in vacant spaces. Take, for instance, ADDA Rev-Gen Engine.
Importance of Financial Governance in Communities
In the next session, Rahul stressed the importance of E-governance in a smart gated community. He also defined gated communities as a self-designed arrangement of processes & regulations. The major takeaways are as follows –
1. The Reality of Residents & Treasurers in Gated Communities
The reality of the e-governance for respective owners in such gated communities is –
|1. Dissatisfaction with the existing MC and its decision-making.|
2. Unavailability in MC meetings to poll opinions
3. Visitor threat
4. No proper helpdesk system
5. Unattended facility issues
|1. Criticism from other MC members|
2. Unpaid professional finances management
3. Unawareness of budget variance to actuals
4. Unsystematic invoicing & receipting
5. Lack of confidence in issuing vendor cheques.
2. E-Governance – What is it?
- The five pillars of E-Governance are – a) Common objective, policy & processes, b) Smart management people, c) Accountability of concerned bodies, d) Facility & vendor resources, and e) Information & Communication Technology (ICT) platform which is also a total service provider (TSP).
- The must-have features in a reliable TSP are integrated dashboards for all admins, online broadcasting, a voting system, an asset register, and much more.
- Major e-governance issues come first in selecting/entrusting an ICT provider as per budget & support, then implementing it.
3. Procurement & Billing System
- A procurement system involves purchase management in 4 steps that start right from Purchase Request and move to purchase order, invoice, and payment.
- With a good procurement system, treasurers can overcome issues like wrong vendor deliveries, monthly overbudget, inaccurate invoices & due payments, and much more.
- Next, an efficient billing system must ensure fixed CAM charges, 100% automated billing & virtual payment support.
GST & Taxation Checklist for Communities
In the third session, Sunil talks about how a robust society accounting software can help treasurers right from bookkeeping to book closure. The major takeaways are mentioned below –
1. Why do Treasurers Need an Accounting Schedule?
Challenge: During or at the time of a financial audit, a treasurer faces issues with cash flow management, accounting system organization, financial reports, incomplete auditing, and much more.
Solution: Follow a periodic accounting schedule as shown below –
Check out our Financial Audit Webinar here for more information.
2. Why Choose a Robust Society Accounting System?
- An automated society accounting software provides accurate data with intelligence
- It costs less than 0.5% of your total monthly expenses.
- It is built, tried & tested with global best practices.
- Like a robust system, ADDA supports 5 distinctive modules such as Income Tracker, Expense Tracker, Bank Reconciliation, General Ledger, and Utility Tracker.
3. Common Accounting Challenges Faced by Treasurers and Their Solutions
1. Challenge: Tracking of invoices, receipts, GST summary & closing balance of each income account.
Solution: Get 50+ MIS reports on the ADDA Income Tracker module to track all such details in a click.
2. Challenge: Ensuring proper expense comparison by depending on Excel sheets or multiple systems.
Solution: Access total transactions & expenses on line items for each period ledger-wise
3. Challenge: Difficulty in budget management
Solution: Get a complete picture of the budgeted amount, actuals, variance percent, and GST applicability/non.
4. Challenge: Managing cash inflow and outflows in your Association’s treasury.
Solution: Get detailed cashflow statements every month to check your income & expenses.
5. Challenge: Tracking deficit and surplus in the financial statement.
Solution: Get ready-made financial reports of assets and liabilities with proper grouping and detailed information in a click.
6. Challenge: Wasting spare time in preparing the auditing schedule
Solution: Download ready-made auditing schedules like maintenance receivables, payables, credit notes, member closing balance, etc in a few clicks.
In the last session, Iswar Dixana highlighted best practices for efficient management handover. We agree with him that sustained financial governance can safeguard your community from pressing legal issues in the long run.
The Q/A Session:
Q. How to mark GST & Income Tax provisions in a TSP for vendor management?
Ans: In an efficient TSP, a treasurer can manage vendors by marking TDS & GST during invoicing, return filing GST & TDS reports, and checking financial statements.
Q. How to ensure proper budgeting of invoices in a TSP?
Ans: In an efficient TSP, you will have the option to budget as per the Chart of Accounts for analyzing the variances against invoices.
Q. Can an Association register under the KAOA 1972 Act in the absence of a builder?
Ans: Yes, an Association can register itself under KAOA 1972 Act with the deemed conveyance in absence of a builder.
Q. Is there a law imposing non-occupancy charges (NOC) on flat owners?
Ans: Yes, as per section 79A of the Maharashtra Cooperative Societies Act, 1960, an owner incurs NOC up to 10% of the society’s service charges if he keeps his flat vacant or on rent.
Q. Can I check warranty documents of assets during maintenance?
Ans: You can track asset maintenance history against each basic or AMC asset using the ADDA Asset Tracker module.
Q. What are the best practices for society billing?
Ans: The best billing practices to follow are – On-time billing, accurate bill calculation, correct arrears & late payment interest calculation, and immediate accounting entries for bills.
Q. What are the golden rules of accounting discussed in the workshop?
Ans: The golden rules of society accounting are – minimal cash collections, relevant TDS deductions, one account for collections and multiple for holding funds, regular bank reconciliations & on-time audit supervision.
We are thrilled by the positive feedback received from our audience. Stay tuned for more such interactive & powerful learning experiences across the ADDA community.
If you like to know more about the importance of financial governance in your community, contact us and we’ll be happy to help.