Sectional title property in South Africa: an accounting and auditing perspective

English: This study was undertaken against the background of the current housing problem in South Africa. Sectional titles play an important role in addressing this challenge, which is a high priority problem in the country. Very little research has so far been done on the South African sectional title industry from an accounting and auditing perspective. Furthermore, legislation in this regard is often contradictory and confusing. In addition, pressure regarding costs such as audit fees and management fees from owners of sectional title units bring about unique challenges and problems for the industry. These aspects do, however, provide ample opportunity for research. The first main aim of this study was an overview of practical problems experienced from an accounting and auditing perspective regarding risks associated with sectional titles, auditing-specific problems relating to sectional title and accounting-specific problems relating to sectional title. The second, two-fold aim of the study was to find possible solutions to the above-mentioned problems and to make recommendations in this regard. The third aim of the study was to set industry benchmarks by way of analysis and interpretation of a sample of annual financial statements of sectional title schemes over a three year period. These benchmarks can be of assistance as an industry standard for owners, trustees, managing agents, auditors and accountants rendering a professional service within the sectional title industry. The literature review of this study covered three main aspects in respect of sectional title schemes, namely legal aspects relating to accounting and auditing matters of sectional title schemes, auditing and assurance aspects and accounting and reporting aspects. The literature review paved the way for a detailed analysis of the auditing and accounting aspects relating to the sample of body corporate financial statements and an empirical study performed on the sectional title industry in South Africa by way of interviewing a sample of role players in the industry. The results of the empirical study and data analysis revealed a great number of contradictory and confusing legal aspects as well as uncertainties in the industry. Various problems and concerns were addressed and practical recommendations were made of which the industry should take note. The empirical findings can also be used as a valuable basis for further research.