The Roles of the Chair, Secretary and Treasurer of the Executive Committee
This is not to be construed as providing legal advice, or as prescribing how any particular owners corporation should manage its affairs. It is a summary, in layman's language wherever possible, of how some important concepts are provided for in the legislation, and how owners corporations might take account of those provisions when formulating their management philosophies and procedures.
The AGM must elect an Executive Committee (EC). See Is it true that if an OC fails to elect an EC all members of the OC are members of the EC? in The Owners Corporation, and it is most of the way down that list.
Then the EC must elect a Chair, Secretary and Treasurer. S40 of the UT(M)A.
Even where the EC has delegated the performance of some or all the tasks of an office to a manager, the EC must still have a Chair, Secretary and Treasurer to operate lawfully. The provisions in the UT(M)A relating to delegation do not override S 40.
It should also be noted that the EC members are individually subject to financial penalties under several provisions of the UT(M)A. They are not protected against those penalties just because they have delegated those powers.
The role of the Chairperson is required by the UT(M)A to
to chair general meetings of the Owners Corporation (OC) and EC;
to set the agenda for general meetings of the OC and EC meetings, in consultation with the secretary, the owners corporation manager (if any)
to talk to the Secretary, Treasurer and manager (if any) about the exercise of their functions.
Logically that is a minimum statement of the role of the Chairperson. To achieve a well functioning and cooperative OC the Chairperson needs to recognise the role and input of other members of the EC in framing the EC’s agenda. Further the interests and inputs of all owners need to be recognised in the EC’s agenda and the operation of the OC generally.
This is a leadership role but not a role of autocracy. All owners have an interest in the OC.
The Secretary’s role in the UT(M)A is to act on behalf of the EC in a range of administrative and communication tasks like
giving notice of EC meetings and general meetings
preparing and sending EC minutes to EC members and General Meeting minutes to all owners
to keep the records of the owners corporation, other than financial records
give notices and S119 certificates as required by the Act
prepare correspondence and
give other administrative support.
There are great differences between OCs and between different Secretaries in the one OC in how much of the workload the Secretary undertakes and how much is performed by the manager. Some ECs would not dream of meeting with the manager present and the Secretary prepares the minutes. The Chair or Secretary then brief the manager. Others meet with the manager present and the manager then prepares the minutes. It is really a matter of choosing the best person for the job based on the range of skills and experience available on the EC.
However, the EC remains responsible for the accuracy of all the documents sent out on behalf of the EC and OC. For example, a S119 certificate did not mention that a large special levy for painting was about to fall due. The new owner objected to the unknown cost and the inaccuracy of the certificate. ACAT, in an unreported matter, decided that the OC could not charge the new owner a contribution it had failed to mention in the S119 certificate. The EC had neglected to discuss preparation of S119 certificates with the manager and the oversight of their accuracy that occurred within the manager’s business. So where the EC delegates or directs the manager to prepare documents the EC is still responsible for them and needs to agree with the manager that it will clear all or certain documents before that are distributed in the name of the EC and OC.
While most Treasurer’s operate in an oversight role rather than hands on collecting levies and paying bills, careful performance of this role is crucial.
The Treasurer’s role according to the UT(M)A is
to send out levy notices to all owners
to give financial reports to meetings of the EC to allow the committee to monitor the financial performance of the OC
to pay money the OC receives into the OC’s account
to pay the OC’s bills from the OC’s accounts, in accordance with section 68 (1) (c), as authorised by the executive committee
to prepare and certify the annual financial statements for presentation to the AGM
on behalf of the EC, to keep the financial records and
arrange for the records to be audited by a qualified auditor if necessary.
If the OC has three or fewer units it may exempt itself from having a bank account but the Treasurer still has to receive, receipt and account for money received and spent.
Many accounting packages used by managers are not very functional and are sometimes operated by staff with limited skills and training. Without regular oversight and correction, errors abound and compound. So unless the Treasurer does check the financial report, query transactions and get errors corrected promptly the mistakes compound as the year goes on, making the end of financial reports very difficult to reconcile. You check your credit card statement and query purchases you do not think are yours, so check the OC accounts for errors.
One diligent Treasurer found a large, unexpected plumbing expenditure and queried it. It was for work at another OC altogether and no EC member at either OC had approved its payment. Another careful owner queried numerous items in the end of year accounts before an AGM. The AGM had to be deferred while the accounts were corrected to discover the OC’s financial position was distinctly better than the EC had been led to believe.
So while the Treasurer is not doing the physical collection and payment, the accounts and reports do need to be continually monitored.
Although it is initially time consuming, many Treasurers find it is helpful to construct their own spreadsheet or accounting package to mirror the OC accounts. That way they can in real time see what is happening. If for example there is a pipe blockage and the EC approves urgent plumbing work the Treasurer can factor that into the EC’s mirror accounts long before the invoice arrives and know that financial difficulties are impending so the EC can take proactive action or that there is no significant impact on the bottom line.
Unless the EC gets regular financial updates and approves the payment of bills, most EC members have no conception of the OC’s capacity to meet unexpected expenditure and ultimately its solvency or about the viability of their own project proposals.
Many OCs allow the manager to develop the budgets for the next financial year. This is not a long-term sensible procedure. In most cases when managers prepare budgets it is done against a pro forma and does not take account of large invoices that will not arrive until the new financial year, the impacts on insurance or water costs of the current years’ events or new projects. It also does not take account of prepaid levies, which throw the following years expected receipts out. The better process would be for the EC or a subgroup or subcommittee of the EC to develop the budget and then discuss it with the manager if they think that is necessary or advisable.
There is a widespread belief that if the General Fund is overspent, funds can be moved short term from the Sinking Fund to make up the deficit. This is unlawful. There is no provision in the UT(M)A to allow this and several provisions that prohibit it. See S83 and S88 of the UT(M)A.
What an EC can do is re-examine whether all expenditure attributed to the General Fund entirely belongs there. For example, what begins as a routine maintenance task may become more expensive as extra work that should be attributed to the Sinking Fund is undertaken to stop the recurrence of the routine maintenance. If the costs of the extra work are moved to the Sinking Fund the General fund can be brought back into balance, entirely lawfully.
The EC is subject to penalties in the performance of its duties. For full details see the Penalties article.