The financial statements have been prepared under the historical cost convention and in accordance with Financial Reporting Standard 102 section 1A Small Entities "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006.
Service Charge Accounts
Service charge monies collected by the company are held in trust for the purpose of meeting the relevant costs in relation to Baltic Wharf properties in accordance with the provisions of Section 42 of the Landlord and Tenant Act 1987.
The key accounting policies used in the preparation of the accounts are:
-A residential management company (RMC) always acts as principal when entering into transactions with third party suppliers.
-Transactions entered into with third party suppliers for the purpose of maintaining the property should be recognised in the profit and loss account of the RMC. Furthermore, the RMC should concurrently recognise income from drawing on the service charge cash received from members; and
-The cash balance arising from the service charges received from contributing members is held in statutory trust under section 42 of the Landlord and Tenant Act 1987. It is not an asset of the company and should not be recognised in the statutory accounts. Instead it is proposed that the RMC make detailed disclosures regarding the amount of cash and other balances held in trust.
Consequently, the income from and the balances relating to the services charges collected from residents are not included in the company accounts. This information is dealt with as a separate statement of account which does not form part of the annual accounts of the company.