Background
I was engaged to complete an on-boarding project for a Strata Company transitioning from an agency that had experienced staff turnover, inconsistent processes, and a lack of financial oversight. As part of the transition, I was asked to review and stabilise their trust accounting records.
What initially appeared to be a standard handover quickly revealed far deeper issues.
For more than two years, the Strata Company had not held an AGM, its trust bank account had not been reconciled, and the remaining staff did not know how to operate the trust accounting software. Paper records were kept in ad-hoc piles, filing systems were inconsistent, and documentation was incomplete or duplicated. The absence of structured processes meant there was no clear visibility of the Strata Company’s financial position, GST obligations, or the accuracy of lot allocations.
This case study outlines the steps taken to restore financial integrity, rebuild compliance, and implement sustainable processes.
The Challenge
The core issues identified during the on-boarding phase included:
- Three years of unreconciled trust bank account, leaving the financial position unknown
- Paper-based recordkeeping, with documents stored in boxes, loose folders, and unlabelled piles
- Missing or duplicated receipts, resulting in incorrect lot allocations and inaccurate levy distribution
- No bank statements provided at handover, requiring several days of persistent follow-up to obtain
- Two years of overdue BAS lodgements
- Remaining staff unable to operate the trust accounting software
- Unpaid contractors ceasing essential services, including lift maintenance and fire protection
- Levies not raised for an extended period, placing significant financial strain on the Strata Company and its owners
The situation required not only technical accounting expertise, but also methodical problem-solving, patience, and a structured approach to untangling years of administrative disorder.
Approach and Methodology
Establishing Order from Chaos
The first step was to create a workable system from the existing paper records. This involved:
- Sorting documents by financial year, then by month, then by transaction type
- Identifying gaps in documentation and creating a checklist of missing items
- Reconciling records against three years of bank statements to confirm completeness and accuracy
This initial triage created the foundation needed to begin reconstruction of the financial records.
Manual Reconstruction of Financial Data
With no reliable digital records, every transaction had to be manually verified. This included:
- Reconstructing financial records for each financial year to determine accurate opening balances
- Rebuilding complete ledgers from paper receipts, invoices, and bank statements
- Cross-checking receipts to identify missing documentation, duplicates, and inconsistencies
- Tracing unexplained transactions back to source documents
- Reconciling levy receipts against owners’ ledgers
- Re-allocating lot positions where levies had been incorrectly coded
- Reconstructing GST figures to prepare accurate and compliant BAS lodgements
This process required meticulous attention to detail and a forensic approach to trust accounting.
Reconciliation and Error Correction
Once the data was reconstructed, the following steps were completed:
- Full bank reconciliations to the handover date
- Identification and correction of:
- Unposted transactions
- Duplicate entries
- Unallocated receipts
- Incorrect lot allocations
- Reconciliation of GST across multiple quarters, ensuring accurate input tax credits and output tax obligations
This work restored the financial statements to a reliable and auditable state.
Outcome
Through a structured, methodical, and detail-driven approach, the Strata Company:
- Regained full visibility of its financial position
- Restored compliance with trust accounting and GST obligations
- Eliminated years of accumulated errors and inconsistencies
- Rebuilt confidence with owners and stakeholders
This on-boarding project reinforced the importance of rigorous trust accounting and the systems that support it.
Key Lessons
- Poor documentation compounds over time, small lapses become major risks when left unchecked
- Paper-based systems are vulnerable to loss, duplication, and human error
- Reconciliation is not optional, it is the backbone of financial integrity
- A structured, analytical approach can restore order even in the most chaotic environments
- Strong processes protect both the Strata Company and its owners
