Service charge accounts are 'not for profit' and required by virtue of Landlord and Tenant legislation not company law. Service charge accounts should not be confused with accounts for filing at Companies House.

For blocks of flats the Company Accounts that are required for filing at Companies House may be 'dormant', 'abbreviated' or 'trading' company accounts depending on whether ground rent is collected, lease extensions have been sold or whether owners have clubbed together and bought the freehold.

Otherwise, the service charges you demand may not be due, and if you need to go to Court to seek recovery your service charge accounts, Freehold Company or Right to Manage Company accounts will need to hold up to scrutiny.

Here are some tips, you'll need:

Service charge accounts of schemes managed by ARMA members are normally subject to either an Audit or a Report of Factual Findings, depending upon the lease and the size and nature of the property/scheme. LAN 08 states that “all annual statements of account should be subject to an examination by an independent accountant before issuing to lessees”.

Accountants undertaking Audit for service charge accounts must be qualified to do so and must be members of the recognised supervisory bodies for company auditors (as listed in Appendix J of the ICAEW Technical Release Tech 03/11) who are entitled under the rules of the body to which they belong to engage in public practice.

The focus of accountancy qualifications from other accountancy bodies not listed in Tech 03/11 is not usually that of audit. The competencies to complete the second type of financial report that appears in the technical guidance - a report on factual findings - require an accountancy skill-set (albeit that there is no requirement to be a statutory auditor under the Companies Act). It is essential that ARMA members who are in a position to appoint a reporting accountant (or to recommend the appointment of a reporting accountant) satisfy themselves that members of other accountancy bodies maintain the requisite skill-set. Members of other accountancy bodies would seek and provide guidance from their own professional bodies as to their suitability to perform such engagements.