The Association of Residents of Queensland Retirement Villages (ARQRV) has hired an external accountant to look over legislation released by the State Government over concerns that there is no requirement for operators to apply the Australian Accounting Standards to their financial reporting.
As we reported here, the Queensland Government released papers on minimum standards for financial reporting and budgeting and standardised residents’ contracts last week.
The ARQRV particularly questions the classing of retirement village reports as “special purpose financial reports” which exempts them from compliance with the Australian Accounting Standards.
No requirements on financial accounting standards
They have also raised issues with some of the terminology, namely the use of “significant report expenditure” and “significant expenditure”.
The consultation proposes these be defined as any expenditure greater than $1,000 or 10% of the total expenditure.
“Given that both the CRF and MRF can involve significant total expenditure (particularly in larger villages), setting the threshold for a separate line item at 10% of total expenditure will allow for large, aggregated line items that limit transparency for residents about the expenditure from the fund, and limit the ability of residents to monitor whether each item of expenditure has been attributed to the correct fund,” their submission states.
“There are frequent disputes in villages about whether the replacement of a relatively small capital item (such as a smoke alarm) should be treated as a ‘replacement’ to be paid from the CRF (which is funded by the operator) or a ‘repair’ or ‘maintenance’ to be paid from the MRF (funded by residents). If there is insufficient detail in the quarterly and annual reports about the expenditure from these funds, it will exacerbate such disputes instead of assisting to resolve them. The operators retain detailed records of all expenditure anyway, so it would not be an onerous to require that detail in the reports.”
Govt regulation going to “too fine a level”
The association has also highlighted a number of issues around the words and arrangements being put forward.
Former Treasurer John Rae – who examined the consultation drafts – says he believes the Government is trying to regulate the presentation of financial reports to too fine a level – and the regulations show a lack of knowledge about generally accepted accounting principles.
“If the regulations began with the statement that all scheme operators must apply relevant Australian Accounting Standards to their accounting procedures and financial statements, that would cover most of the regulatory requirements,” he said.
Property Council: additional consideration needed
The Property Council has also indicated that some elements of the regulations need improvement,
“In terms of the standard contract amendments, the Property Council supports the principle of many of the amendments,” Ben Myers (pictured right), Retirement Living Council Executive Director, said.
“However, there are some elements that require additional consideration to ensure the overall objective of the amendments are being met.”
“Government have been highly receptive to industry and resident feedback and have demonstrated a willingness to work with both parties in a welcomed move.”
“Ensuring that the retirement living industry can continue to provide age-friendly housing and support to older Australians remains a priority of the Property Council and residents, I am hopeful that this can result in fair and sensible reform.”
Is this yet another sign that Governments have a poor understanding of how the village sector operates?