Guide to Variable Outgoings Reconciliation

• A variable outgoings budget is created based on the prior year charges and amended to allow for inflation.
• The tenant is then charged monthly, the annual budgeted amount / 12
• At year end the budgeted Variable Outgoings are reconciled against the actual VO charges to ensure they balance.

If there is a discrepancy between the 'actual charges' and 'budgeted charges' the tenants will either be:

• Credited the over charge (and possibly refunded) or 
• Invoiced for the under charge.

Variations to the rule:

• Land tax, if the property owner owns multiple properties the land tax cannot simply be divided by the number of properties, the assessable value must be calculated for each specific tenanted property as Land tax can only be charged on a single ownership basis.  
  WA Department of Finance online calculator, advises what if any land tax is assessable for a property based on the assessed property value.
• Air-conditioner maintenance, If this is not included in outgoings then the tenant is solely responsible for the maintenance of the AC and should be processed separately, If it is included in outgoings the tenant is not personally responsible for maintaining the AC.
• Graffiti and Plate Glass Insurance are usually covered under Strata Levy, however and may need to be processed separately.

This is a combination of 'On Demand' and 'Monthly Budgeted'.

The summary is the page which summaries the final position that is arrived at from all the other sheets. Showing the actual expenses in each category calculated, the corresponding budgeted and prior year cash expenses.

It also shows the total amount charged to tenants plus or minus the adjustment required.

•  The 'Difference' amount should be zero or less than .05 due to rounding off difference. As it is comparing the 'VO's Charged' total net in 'Tenant Charges'' sheet against the Actual Expenses, which should be the same. If not, investigate why, it could mean that a lease ended and the new lease is covering a different space i.e. unit split. To confirm go to Tenant Charges Tab

The PM authorities the reconciliation here.

A summary per account code. Which calculates the Final VO expenses. Starting with the Expense Paid column then adjust for the following:

Subtracted from Expense Paid:

• Accruals Reversal are Accruals (cost) for prior period paid in this period, they are extracted to the Accruals Reversal column, to calculate the Final Expense. See Accruals Reversal sheet for detail.
• Pre-Payments for services not yet (fully) rendered prior to reconciliation date, so amount for X number of days is extracted to Pre-Payments column, to calculate the Final Expense. See Pre-Payments sheet for in detail. Example: Insurance is paid in total for 12 months, if the 12 months don't all fall within the reconciliation period, so pre-paid portion is the portion of the expense that relates to period after reconciliation date.

Added to Expense Paid is:

• Accruals for this period unpaid before the reconciliation date, are brought into Accruals column (added to Expense Paid) to calculated Final Expense. See Accruals sheet for detail.
• Pre-Payment Reversal for prior period pre-payments rendered in this period, are brought into Pre-Payment Reversal column (added to the Expense paid) to calculate the Final Expense. See Pre-Payment Reversal sheet for detail. Example: Insurance is paid in total for 12 months in the prior period, however a portion of the 12 months falls in this reconciliation period (say 2 months), so pre-paid reversal portion is the portion of the expense that relates to this period (2 months).

Lists each individual tenant that occupied the property during the reconciling date range. See 'Tenant Charges Detail' sheet for detailed breakdown of all charges line by line per tenant.

• 'Reconciliation Days' column is the number of days the tenant occupied the unit.
• '% of Area' column is the percentage of the entire property area occupied by the tenant.
• 'Proportion of Expense' column is the proportion of expenses the tenant is liable for and is established using reconciliation days and % of Area column, or budget allocation dependant on the mthod chosen.
• 'VO's Charged' column shows the total that has been charged to the tenant for the date range. 
• 'Tenant Adjustments' column is the difference between the 'VO's Charged' and 'Proportion of Expenses' columns.

The owner pays the 'tenant portion' in the following circumstances:

• If the tenant is on a Gross Lease they only get charged rent and not variable outgoings. as such there is no adjustment for them. thus it goes into 'Owner's Cost' column.
• Also If a unit is vacant for a period, there is no tenant to allocate the share of costs too, thus the owner has to pay for vacant areas.

Check that Proportion of Expenses Total balances with Final Expense Total in Expense Paid sheet.

Pre-Payments (also called future period costs), received this year for services to be received next year. They are shown as positive on Expenses paid sheet. 

Example: Reconciliation period - 1/7/11 to 30/6/12, with council rates bill of $6,000 paid for the period 1/7/12 to 30/11/12.
As the period 1/7/12 - 30/11/12 relates to a period after the date range for the reconciliation, this is called a prepayment.

 The amount of the prepayment is $6,000 x (no. of days from 1/7/12 - 30/11/12) / (no. of days from 1/6/12 - 30/11/12) i.e. about $5,000 is the prepaid expense.

The prepaid expenses need to get deducted from the expenses actually paid to give the true expenses for the period.

Last Years Pre-payments is shown here so we bring it into this year.  

Example: goods received/services rendered this year and paid for last year. Pre-Payments Reversal are shown as negative on the Expenses paid sheet. 

Have not been paid by the end of the reconciling period, so they are not included in Expense Paid column (Expense paid sheet), therefore they are added in the Accruals column (Expense paid sheet). This section is divided into two:

• Paid Expense Accruals - These accruals are paid but after the reconciliation dates.
• Unpaid Expense Accruals - These accruals are unpaid.

Shows a breakdown per Account code, of the Accruals (cost) for the prior period paid in this period. From Expenses Paid sheet under Accruals Reversal column and into Accruals Reversal sheet.

Total expense 'from' and 'to' days are calculated in the 'Total Days' column.

The number of the 'Total Days' that fall within the reconciliation period are calculated in the 'Accrual Days' Column.

The 'Accrual Amount' is the proportion of the expense (paid this period) rendered in the prior period and it is established using the 'Total Days' and 'Accrual Days' columns

Shows all charges for all tenants. First section is all VO's and second section is anything other than VO's.

Double check all VO's are actually VO's.

In the final Column (M) ''Period' you can subtotal each tenant lines and compare the amount with the tenants total 'VOs Charged' column in 'Tenant Charges' Sheet.

Shows all Directly Recoverable Income extracted from the 'Tenant Charges Detail' sheet under - Tenant Other Charges Detail, Account Group - DRINC.

Below shows all Directly Recoverable Expenses Paid extracted from 'Expenses Paid Detail' sheet under - Other Expenses Paid Detail, Account Group - DR.

Is a breakdown of line items per account code and payment date. Great for auditors as all the detail is contained here.

If the 'From Date' and/or 'To Date' falls outside of the reconciliation period a portion of the amount will appear under column 'Pre-Paid Days' and show in 'Pre-Payments' sheet. The Total Net Amount is automatically calculated and reduced by the Pre-Paid amount.

Pre-payments are positive and Pre-Payment Reversals are negative on the Expenses paid sheet.