Sectional title property in South Africa: an accounting and auditing perspective
Abstract
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. Afrikaans: Hierdie studie is onderneem teen die agtergrond van die heersende
behuisingsvraagstuk in Suid-Afrika. Deeltitels speel ’n baie belangrike rol om hierdie
hoë-prioriteit uitdaging aan te pak. Daar is nog baie min navorsing gedoen oor die
Suid-Afrikaanse deeltitel-industrie, spesifiek vanuit ’n rekeningkundige en ouditkundige
perspektief. Verder bestaan daar baie teenstrydige en verwarrende wetgewing oor
hierdie industrie. Kostedruk deur eienaars van deeltiteleenhede op onder meer ouditen
bestuursfooie bied verder eiesoortige uitdagings en probleme vir die industrie.
Hierdie aspekte bied egter baie geleenthede vir navorsing.
Die hoofdoel van hierdie studie was ’n oorsig oor die praktiese probleme wat vanuit ‘n
rekeningkundige en ouditkundige perspektief ondervind word ten opsigte van die risiko’s
wat met deeltitels geassosieer word, sowel as rekeningkundige en ouditkundige
probleme wat met deeltitels verband hou. Tweedens is oplossings vir bogenoemde
probleme en aanbevelings ten doel gestel. Derdens was dit ‘n mikpunt om riglyne daar
te stel na aanleiding van die ontleding en vertolking van ’n steekproef finansiële
jaarstate van deeltiteleiendom wat oor ‘n drie-jaar tydperk gedoen is. Hierdie riglyne
kan as ’n moontlike industrie-standaard dien vir eienaars, trustees, bestuursagente, en
ouditeure en rekenmeesters wat professionele dienste aan die deeltitel-industrie lewer.
Die literatuuroorsig van die studie fokus op drie hoofaspekte aangaande
deelititelskemas, naamlik, regsaspekte rakende rekeningkundige en ouditkundige
kwessies, ouditkundige- en gerusstellingsaspekte en rekeningkundige- en
verslagdoenings-aspekte.
Die literatuuroorsig baan die weg vir ’n uitvoerige ontleding van die ouditkundige en
rekeningkundige aspekte van ‘n steekproef finansiële jaarstate asook ’n empiriese
studie gedoen oor die deeltitel-industrie in Suid-Afrika deur middel van onderhoude wat
gevoer is met ‘n steekproef rolspelers in die industrie.
Die resultate van die empiriese studie en data-ontleding onthul verskeie teenstrydige en
verwarrende regsaspekte en onsekerhede in die industrie. Verskeie probleme en
kommerwekkende aangeleenthede is aangespreek en praktiese aanbevelings is
gemaak waarvan die industrie kennis behoort te neem. Die empiriese gevolgtrekkings
kan ook gebruik word as ‘n waardevolle grondslag vir verdere navorsing.
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