In the residents' proposed budget, for the financial year ending 30 June 2022, put forward by the Operator, the specific Line Item, 'Maintenance Materials', saw the proposed budget more than double from the previous financial year, from $40,000 to $84,000. Yet, even with this huge increase in the budget of $44,000 for a 12-month period, it failed to cover the costs of 'Maintenance Materials' for the above-mentioned financial year, blowing out to a massive $495,000.
The figures put forward in the following table are sourced from the 'Proposed Budget' and the 'Income and Expenditure Statement' distributed by the Operator each financial year.
Editor's Note: As evident from the table above, the Operator has spent almost half a million dollars on maintenance materials alone for the 2021-22 financial year. The above figures do not include any labour component; it is for materials only.
All figures referred to in this article are sourced from the documentation supplied to residents by the operator/management of the village.
Note: Maintenance Materials have increased from $40,000 in the 2020-21 budget to $84,000 for the 2021-22 FY budget, as indicated by the red dots in the graphic above. This expense has more than doubled from the previous year, on the advice of management.
While management thought it prudent to advise residents of a jump in expenses of more than 100% from the previous year, it pales into insignificance when the actual expenses were released and supplied to residents in the annual 'Income and Expenditure' statement. Actual expenses allocated to the 'Maintenance Materials' account, shown below, were $495,000.
The annual proposed budget and the annual Income and Expenditure Statement should be transparent documents, all aimed at showing residents how the operator intends to spend the residents' recurring fees for the upcoming financial year.
As no 'capital works budget' was supplied to residents as part of the proposed budgets for the 2020 to 2023 financial years, residents could rightfully rule out the possibility that such expenses related to the 'maintenance of capital items'.
Residents have a right to transparency when it comes to examining expenses allocated to their budget.
When the residents' committee at the time asked to examine the invoices allocated to the budget item 'Maintenance Materials' for $495,000, the committee was told we are not entitled to see them.
The matter remains unresolved.
Other issues
Major issues within the village
The 2021-22 Residents Committee had met with the Operator to clarify who was paying for several major projects undertaken by the Operator during the 2021-22 financial year.
The Operator was asked: -
- Who was paying for the stage 1 roof repairs? Operator answer. I am.
- Who was paying for the knockdown and rebuild of the garden beds in Whaling Street? Operator answer. I am.
- Who was paying for the repairs to the water ingress issues of the villas? Operator answer. I am.
As the Operator had provided assurances to the Residents' Committee that he was paying for the above projects in need of repair, with the golf course closed and not functional, the committee was unaware of any other major maintenance issues within the village that required resources (maintenance materials) to the value of $495,000. Certainly, none that would provide the Operator with relief to charge expenses against the Resident's Budget Line Item 'Maintenance Materials' to the value of half a million dollars.
Justified Concern
When residents examine the table (Graphic 1) above, it would be no surprise that the 2021-22 Residents Committee and Finance Sub-Committee were concerned about the meteoric rise of the Budget Line Item 'Maintenance Materials', over the 2020-21 and 2021-22 financial years, highlighted in yellow in the above table (Graphic 1).
Residents' Committee request to sight associated invoices - Operator refused
The Residents Committee asked Management to produce the invoices for 'Maintenance Materials' for the 2021-22 financial year. This would enable the committee to personally examine the invoices to ensure that these huge expenses were justified in being part of the residents' budget, and secondly to ensure that such expenses had not been inadvertently or mistakenly allocated to the residents' 'Material Maintenance' account in error.
Management's refusal to produce invoices, indicating 'Not entitled to see them'
The Operator granted the committee access to his Accountant in an effort to resolve the issue. On the pre-arranged day of the meeting, the Residents Committee, who had earlier contacted PKF(NS) Tax P/L requesting they bring the invoices for examination, failed to produce a single invoice at the meeting.
PKF(NS) Tax P/L insisted that their accounting system was both robust and accurate. Ms. Jennifer Stuart Smith further stated to the two committee members present at the arranged meeting, "You're not entitled to see the invoices".
Legal advice obtained
Residents may remember that the Residents Committee had sought legal advice from Mr. Peter Hill, an RVRA-recommended Solicitor, who, in this matter, advised that the Residents Committee was entitled to see such invoices and if the committee required copies of said invoices, the Operator would be entitled to charge a nominal fee for providing the same. The committee was happy to pay the nominal fee to examine and/or obtain copies of the invoices.
Logical assumption
If the Operator's accounting system is so robust and accurate, with all expenses checked to ensure they have been allocated to the correct expense account, then why the reluctance to produce the invoices, which would allow the Residents Committee to see firsthand that the allocation of 'Maintenance Materials' expenses has been processed correctly?
The Operator/Management's refusal to allow this examination simply raises more red flags.
If the Residents Committee did not query a budget item that exceeded the proposed budget by more than $400,000 in 12 months, the residents of the village would be entitled to describe the committee as negligent in their duties.
