2022-2023-075: Service Charge Audit

MTVH is seeking a Service Charge Audit partner to provide the below audit services to our home ownership and service charge (HO & SC) team on a 3-year (+1, +1 year) contract term. This team is responsible for calculating the reconciliation of service charge accounts for homeowners, by way of analysing the costs attributable to the blocks and schemes within their patch. The officers will approve invoices and budget costs eligible to be charged back to residents when reviewed on the system.

These costs vary from bulk and individual invoices, budget costs from other service areas and Managing agent service charge demands. A review of section 20 consultation compliance for service contracts is also undertaken. Another part of this aspect of reconciliation is to ensure compliance with the lease covenants for service charging including apportionments and sinking fund contributions.

Scope of Services

The successful provider will support the HO & SC team in the following:

1.Reviewing a sample of leases to ensure that lease percentages and apportionments are applied and that costs recovered are allowable as per the lease.

2.Carry out and update our review of controls and systems, that are in place for the generation of service charge actual accounts and assess the adequacy of the controls.

3.To perform an analytical review between the prior year, estimates and actual costs included within the statements to identify significant variances and ensure movements are consistent with our findings.

4.Substantive testing of expenditure to supporting documentation to check that costs relate to communal service charges and have been charged to the correct scheme.

5.A review of management judgements made, on the costs charged to blocks/schemes/estates including accruals.

6.Agree the previous year’s surplus or deficits have been correctly treated within the year.

7.Agree the sinking fund balances and charges made to the statements are adequately recognised in the nominal ledger and interest has been correctly applied per the lease and legislation requirements.

8.Agree on income charges to contribution schedules and confirm the appropriate properties have been included.

9.Review compliance with the Landlord and Tenant Act 1985 for consultation on S20A major works and long-term contract notices are appropriately in place, as well as S.20B for the recovery of costs within the specific time limit.

10.Performing casting checks on statements for accuracy.

11.Provide the certification of the final accounts audit that can be issued to residents.

12.Recognise an upward pipeline of homeownership stock and service charge accounts to audit.

All the reviews must be completed by the end of August each year for those units with a 31 March year end and by 31 May for those units with a 31 December year end.

Account Management

-Main point of contact for the duration of the audit

-Level of seniority on the account to be a senior as the main lead

-Availability of support to be for the whole duration of the audit until sign off

-Technology to be compliant with GDPR and supported by a shared platform and carefully monitored with clear cascade of IT support where any failures occur.

-Innovation sharing desirable, where updates on process improvements, best practices and lessons learned are shared following each audit.

-Temporary point of contact to lead audit in the absence of Main lead of audit

Service Level Agreements

-Quick response times in line with 48 hours for queries, 72 hours for data quality queries.

-Timetable agreed prior to the start of any audit

-Resource of audit team to be confirmed for duration of the audit

-Ratio of resources of audit team to number of accounts to be agreed

-Quality of audit to hit agreed KPIs

-Interim progress reports to be provided, including action plans for slippage on progress reports

-Understand the provisions of Sections 18 to 30 of 1985 LTA and 151 CLARA

-To 100% fully test an agreed minimum number of schemes

Key Performance indicators

-Accuracy of testing invoices

-Be able to review all Section 20 Notices effectively and understand appropriate application

-Achieve agreed Key Target dates throughout the audit

-Review integrity of accounts for those agreed schemes during the audit and report back

-Final reporting of audit to include recommendations