Service Charge Trust Monies
The company acts as a management agent for the residents of The Knoll. In accordance with the provisions of the Landlord and Tenant Act 1987, service charge monies are held on trust for the benefit of the tenants in a separate, designated trust bank account.
These funds do not meet the definition of an asset of the company as the company does not have control over the resource for its own use. Consequently, the cash held in the trust account, and the associated service charge transactions, are held off-balance sheet and are not included in these financial statements.
In previous financial periods, the trust bank account balance and the associated service charge income and expenditure were included within the company's financial statements. The directors have reviewed this treatment and concluded that, as the company does not control these resources for its own use, they should not be recognised in the company's accounts. This change in treatment has been applied in the current year.