The operation of a modern apartment building (MAB) requires solving numerous problems, the main of which are meeting the needs of premises owners for utilities, maintenance of in-house engineering equipment, routine and major repairs of common property. For these purposes, property owners must choose a method for managing an apartment building. Options are provided for in paragraph 2 of Article 161 of the Housing Code. Let's look at two of them, the most common - when management is carried out by a homeowners association (HOA) or a management organization. The latter is usually called a management company (MC). These are legal entities whose functioning is unthinkable without well-functioning accounting. What are its features?
Selecting a control method
Homeowners Association
- a non-profit organization that is created by the owners of premises for joint management of common property and its maintenance, as well as for receiving utilities. The decision to create an HOA is made at a general meeting of owners by a majority vote (Article 135 of the Housing Code of the Russian Federation). And the number of votes that each owner of the premises has is proportional to his share in the ownership of common property in a given house (Clause 3 of Article 48 of the Housing Code of the Russian Federation).
Since September 1, 2014, HOAs have been classified as partnerships of real estate owners (Articles 123.12 – 123.13 of the Civil Code of the Russian Federation, subparagraph 6, paragraph 8, Article 3 of the Federal Law of May 5, 2014 No. 99-FZ). Please note that the HOA is not considered a small business entity.
Reference
Homeowners' associations and management companies use OKVED code 70.32 "Real estate management" (70.32.1 - "Management of the operation of the housing stock", 70.32.2 - "Management of the operation of the non-residential stock").
At the general meeting, the owners must decide whether to organize an HOA or hire a specialized management company (subclause 4, clause 2, article 44 of the Housing Code of the Russian Federation). The law also allows such a construction, when the HOA enters into a management agreement with the management company. But we will not consider this scheme.
But if the HOA is not created, then the management company chosen by the owners enters into an agreement with each of them on the terms specified in the decision of the general meeting (clauses 1, 2 of Article 162 of the Housing Code of the Russian Federation).
The management company is a commercial organization. Under the management agreement for a fee, she undertakes:
- provide services and perform work on the proper maintenance and repair of common property in the apartment building;
- provide utility services to premises owners.
The HOA is based on the membership of the owners (clause 1 of Article 143 of the Housing Code of the Russian Federation). The source of financing its activities are mandatory payments and contributions from members of the partnership, the amount of which is determined by the general meeting. In addition, the general meeting approves the estimate of income and expenses of the partnership for the year (subclause 4, 8.1, clause 2, article 145 of the Housing Code of the Russian Federation).
Important
Membership in the HOA arises from the owner of the premises in an apartment building on the basis of an application to join the HOA.
The status of a commercial or non-profit organization determines the features of accounting and taxation of its activities. However, in any case, the burden of expenses for maintaining the common property of apartment buildings is borne by the owners of the premises. And the activities of managing apartment buildings are regulated by uniform rules, which are approved by Decree of the Government of the Russian Federation of May 15, 2013 No. 416.
Let's consider the main provisions of the accounting policies of HOAs and management companies.
Reasons for consolidation
Experts cited the low profitability of this business as the main reason for possible consolidation in the housing and communal services market. Management companies complained about profitability of 5-7 percent, but they did not abandon the business. And, if before 2021 these were just words that actually hid all 10-15 percent, now, thanks to a number of measures taken by the government, the figures may gradually begin to approach that 5% that is unsatisfactory for businessmen, but adequate for the industry as a whole.
The legislation moves the market towards greater transparency. Mandatory disclosure of information in the GIS, deprivation of licenses for dishonest work, requirements for automation of processes for maintaining registers and processing applications, transition to direct contracts with RSO, creation of a legal basis for holding electronic meetings of owners, and other effects of the “regulatory guillotine”, the main blow of which will fall for 2021 will inevitably lead to the fact that the usual Soviet management schemes will become a thing of the past. With such profitability, housing management based on outdated approaches becomes unprofitable when the management area is less than 1 million square meters. meters. This reason will lead to consolidation in the segment of companies that will be unable to see and implement new ways to increase the profitability of their work, namely, the introduction of a digital platform and a shift in the source of profit from housing management to the creation of an ecosystem of services for their residents. The reason remains the same - finding ways to improve profitability, but the opportunities of digitalization, opening up new ways to solve this problem, will lead to consolidation occurring at several levels.
Sources of Homeowners' Association Funds
To begin with, let’s determine the nature of the HOA’s income. The funds of the HOA consist of (clause 2 of Article 151 of the Housing Code of the Russian Federation):
- mandatory payments, entrance and other contributions of members of the partnership;
- income from the economic activities of the partnership;
- subsidies (to ensure the operation of common property, repairs, provision of certain types of utilities, etc.);
- other income.
The HOA uses funds from mandatory payments and (or) contributions to pay for the costs of maintaining and routine repairs of common property in an apartment building, as well as to pay for utilities (Clause 5 of Article 155 of the Housing Code of the Russian Federation). They do not generate income.
On a note
An HOA is not an economic entity with independent economic interests different from the interests of the members of the partnership. By concluding contracts for the provision of utility services, for the operation, maintenance and repair of residential premises and common property in apartment buildings, as well as employment contracts with specialists, the HOA acts in property transactions not in its own interests, but in the interests of its members (resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated 05.10 .2007 No. 57).
The list of types of economic activities that the HOA has the right to engage in is closed. This:
- maintenance, operation and repair of real estate in apartment buildings;
- construction of additional premises and common property in the apartment building;
- leasing, renting part of the common property in an apartment building.
Income from such activities is used to pay general expenses or is sent to special funds spent for the purposes provided for by the charter of the HOA (Article 152 of the Housing Code of the Russian Federation).
An important nuance: the HOA manages the building as a whole and for this purpose collects funds from all owners of the premises. Meanwhile, not all of them are members of the HOA (Article 143 of the Housing Code of the Russian Federation). Such persons pay a fee for the maintenance and repair of common property in the apartment building and a fee for utilities in accordance with agreements concluded with the HOA (clause 6 of Article 155 of the Housing Code of the Russian Federation). These funds are classified as other income.
As you can see, the HOA receives funds of a different nature. The classification of income determines the accounting policy.
Revenue from utility services
The first and largest item of revenue for a management company is tariff utility revenue. It is worth taking a closer look at these types of income that the management company may or may not receive. Not all management companies charge utility resources to residents. Only those organizations that have concluded resource supply agreements with homeowners are involved in accrual. In some cases, utility bills are paid directly to citizens by resource-supplying organizations. The management company can make accruals in the following cases:
- Receiving funds from residents in the form of a monthly fee for the provision of services. These include bills for gas, water, heating and electricity. In this case, we are talking about a situation where the management company independently provides utility resources for residents of an apartment building
- In any case, management companies charge utility resources for public utility services (general household needs). calculation is made based on the area of the apartments
Invoices are issued based on the tariff for a particular type of utility service. The tariff is set at the regional level and the management company itself cannot influence it.
Management companies do not have marginal profit (profitability) for these items. This is prohibited by law. Those. if an organization has charged 1,000 rubles for heat, it must transfer 1,000 rubles to the account of the heat-generating organization or boiler house. This is why normal management companies argue with resource supply organizations to the last minute and try not to enter into tenants’ contracts for themselves. This is the most problematic item of income for the management company.
Accounting in the HOA
Most accountants (and not without reason!) consider tax accounting more responsible. So let's start with it. And we will formulate an accounting policy for accounting purposes based on the need for tax calculation.
As a rule, HOAs choose a simplified taxation system. The fact is that the use of this special regime allows the use of reduced insurance premium rates. Namely, contributions for employees are paid only to the Pension Fund, and at a rate of 20 percent. Grounds – subparagraph 8 (“i.2”) of paragraph 1 and paragraph 3.4 of Article 58 of the Federal Law of July 24, 2009 No. 212-FZ “On insurance contributions to the Pension Fund of the Russian Federation, the Social Insurance Fund of the Russian Federation, the Federal Compulsory Medical Insurance Fund” .
note
If all owners of premises in an apartment building are members of the HOA, then settlements with them do not generate income. An exception is remuneration for work and services of an individual nature (subclause 4, clause 1, article 137 of the Housing Code of the Russian Federation).
The receipts of HOAs, which do not generate income during the “simplified” system, are listed in letters of the Ministry of Finance of Russia dated January 21, 2014 No. 03-11-11/1653 and dated August 16, 2013 No. 03-11-11/33417. In accordance with tax legislation, these are:
- contributions of members (introduction, membership, shares) for the maintenance of the HOA and the conduct of its statutory activities;
- funds from premises owners to finance repairs of common property;
- budget funds allocated to HOAs for shared financing of capital repairs of apartment buildings in accordance with Federal Law dated July 21, 2007 No. 185-FZ “On the Fund for Assistance to the Reform of Housing and Communal Services” and the Housing Code;
- funds received by the HOA as a commission agent, agent and (or) other attorney, if such costs are not subject to inclusion in the expenses of the commission agent, agent and (or) other attorney in accordance with the terms of the concluded agreements.
It is important to know
The common property of apartment buildings (clause 1 of article 36 of the Housing Code of the Russian Federation) is accepted for off-balance sheet accounting - both in the HOA and in the management company. To do this, you should open a special account.
The statutory activities of the HOA are described in paragraph 1 of Article 135 of the Housing Code. In particular, it involves the maintenance of common property and the provision of utilities to persons using premises in the apartment building. Consequently, receipts from HOA members for these purposes are considered membership fees and do not generate income for tax purposes. But funds for the same purposes coming from “non-members” are already income.
The scope of the rights and obligations of HOA members and “non-members” (premises owners) is the same (Article 143.1 of the Housing Code of the Russian Federation), therefore, to reduce the amount of tax during the “simplified” tax regime, encourage owners to join the HOA. In addition, an owner who is not a member of the HOA is at a disadvantage. Without participating in general meetings of HOA members, he can influence decision-making, but is obliged to participate in the costs of maintenance and repairs, the amount of which is established by the general meeting of HOA members.
The question arises: is it possible to consider the HOA as an intermediary between owners and resource-supplying organizations in calculations for individual consumption of utilities? This position is relevant in relation to “non-members” of the HOA. There is no universal answer to this question. The resource consumer is the premises owner. But an individual owner cannot act as a principal, since the HOA enters into an agreement for the supply of electricity, water, heat, and other things to the house as a whole (all owners). In addition, a transaction completed before the establishment of relations under an agency agreement cannot be recognized as concluded in pursuance of the principal’s instructions (clause 6 of the information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated November 17, 2004 No. 85). The resource supplying organization is not considered a principal for the HOA if it does not pay the HOA a mandatory remuneration (clause 1 of Article 1005 of the Civil Code of the Russian Federation). Let us add that the intermediary agreements of HOAs are described in the letter of the Federal Tax Service of Russia dated April 22, 2011 No. KE-4-3/6526.
So, the income of the HOA includes taxable and non-taxable amounts. The HOA, as a recipient of targeted revenues, is required to keep separate records of expenses incurred within the framework of targeted revenues (clause 2 of Article 251 of the Tax Code of the Russian Federation). This means that the accountant is faced with the task of ensuring the distribution of indirect costs that support the activities of the HOA. In most cases, the basis for the distribution of total costs is the area of the premises. And if the HOA also provides paid services to the owners (say, plumbing repairs), then the costs for them can be allocated based on the share of such revenue in the total amount of revenue.
Costs incurred within the framework of targeted financing are not included in expenses (Clause 17, Article 270 of the Tax Code of the Russian Federation). In the absence of separate accounting, funds for targeted financing are considered subject to taxation from the date of their receipt. Additional clarifications are in the letter of the Ministry of Finance of Russia dated February 21, 2014 No. 03-11-06/2/7386.
As a result, the accountant’s work begins with the formation of itemized cost estimates and their subsequent distribution. In this regard, it is necessary to organize detailed analytical accounting.
Based on the estimate, the following accruals are made for each owner of the premises:
DEBIT 76 CREDIT 86
— the debt of the HOA member is reflected (for obligatory payments, including for individual consumption, as well as for contributions);
DEBIT 62 CREDIT 90 subaccount “Revenue”
— the debt of the owner of the premises, who is not a member of the HOA, is reflected (under the same articles).
The following records are made about the expenses of the HOA:
DEBIT 26 CREDIT 70, 69, 71, 01, 10, etc.
— the costs of maintaining the HOA are recognized;
DEBIT 26 CREDIT 68
— tax associated with the use of the simplified taxation system has been assessed;
DEBIT 26 CREDIT 60
— the costs of maintaining the common property of the apartment building are reflected (according to the accounts of resource supply organizations, as well as for the services and work of other third-party organizations - for example, for the removal of solid household waste);
DEBIT 86, 20 CREDIT 26
— the costs of maintaining the HOA and maintaining the common property of the apartment building (in proportion to the area of the premises) are distributed among the owners of the premises (members of the HOA and non-members);
DEBIT 86, 20 CREDIT 60
— the debt of premises owners for individual consumption of utility resources is reflected;
DEBIT 90 subaccount “cost of sales” CREDIT 20
— costs associated with servicing “non-members” of the HOA were written off.
And since the HOA issues invoices to members and “non-members” on the same principle, the financial result for account 90 “Sales” is not generated.
Settlements with the bank are carried out in the following order:
DEBIT 91 subaccount “Other expenses” CREDIT 51
— expenses for settlement and cash services are reflected;
DEBIT 51 CREDIT 91 subaccount “Other income”
— received interest on the account balance;
DEBIT 91 subaccount “Balance of other income and expenses” CREDIT 99
— profit on transactions with the bank was identified;
DEBIT 99 CREDIT 84
— the balance sheet was reformed;
DEBIT 84 CREDIT 86 subaccount “General Consumption Fund”;
— retained earnings are classified as targeted financing;
DEBIT 99 CREDIT 91 subaccount “Balance of other income and expenses”
— a loss was identified on transactions with the bank;
DEBIT 84 CREDIT 99
— the balance sheet was reformed;
DEBIT 76, 62 CREDIT 84
- the loss is presented to the owners of the premises for coverage.
The formation and use of the repair fund will be reflected by the HOA accountant with the following entries:
DEBIT 86, 20 CREDIT 96
— deductions have been made to the repair fund;
DEBIT 96 CREDIT 60
- reflects the actual costs of repairing the common property of the apartment building.
The HOA accumulates the costs of providing paid services to the owners of premises on an individual basis in account 29 “Servicing industries and farms”.
This accounting policy generally complies with the Recommendations on the organization of financial and accounting for homeowners' associations, approved by Order of the State Construction Committee of the Russian Federation dated July 14, 1997 No. 17-45. True, this document is not normative. In addition, it uses outdated account numbers.
The amount of payments for the maintenance and repair of common property is determined by the management bodies of the HOA on the basis of the approved estimate of income and expenses for the maintenance of common property for the corresponding year (clause 33 of the Rules, approved by Decree of the Government of the Russian Federation of August 13, 2006 No. 491).
Example
The retained profit of an HOA from banking operations and from the provision of paid individual services for the year amounted to 20,000 rubles.
By decision of the owners of the premises, these funds were used to equip a children's playground in the local area of the apartment building. The HOA accountant made the following entries: DEBIT 84 CREDIT 86 “Territory Improvement Fund”
- 20,000 rubles.
– profit from business activities is recognized as a means of targeted financing; DEBIT 10 CREDIT 60
- 20,000 rub.
– the costs of constructing a children’s playground by the contractor are reflected (including VAT); DEBIT 60 CREDIT 51
- 20,000 rub.
– paid for the contractor’s work; DEBIT 86 “Territory Improvement Fund” CREDIT 10
- target financing funds used for their intended purpose have been written off;
DEBIT 012 subaccount “Household association property acquired through targeted financing”
- 20,000 rubles. – structures on the playground are accepted for off-balance sheet accounting (Clause 1, Article 151 of the Housing Code of the Russian Federation).
Accounting policy of the management company
As already noted, the management company is a commercial organization whose purpose is to make a profit. Activities in the housing and communal services sector are not considered profitable, so each management company usually accepts several apartment buildings for service. As a result, according to the income criterion, management organizations do not have the opportunity to apply the “simplified” approach. They pay taxes in accordance with the general tax regime.
Please note that the relationship between the owners of premises in apartment buildings and the management organization is subject to the Law of the Russian Federation of 02/07/1992 No. 2300-1 “On the Protection of Consumer Rights” (Clause 3 of the review of judicial practice of the Supreme Court of the Russian Federation for the IV quarter of 2013, approved by the Presidium of the Supreme Court RF 06/04/2014).
On a note
The bankruptcy of the HOA or the management organization has no prospects, since the bankruptcy trustee will be responsible for collecting debts from the owners of the premises.
The operating conditions of the management company are described in article 162 of the Housing Code. It is important for an accountant to understand the following. When choosing a management organization by a general meeting of owners of premises in an apartment building, a management agreement is concluded with each owner of the premises on the terms specified in the decision of this general meeting. In this case, the owners of premises in this building, having more than 50 percent of the votes of the total number of votes of the owners of premises in this building, act as one party to the concluded agreement. Based on the specified agreement, the management company, on the instructions of the owners of the premises, within an agreed period for a fee, undertakes to provide services and perform work on the proper maintenance and repair of common property in the apartment building, provide utilities to the owners of the premises, and carry out other activities aimed at achieving management goals. The contract must indicate: the procedure for determining the price of the contract, the amount of payment for the maintenance and repair of residential premises and the amount of payment for utilities, as well as the procedure for making such payment. The terms of the agreement are established the same for all owners of premises in the apartment building.
Under such circumstances, all funds received from the owners are recognized as income of the management company, and its costs associated with obtaining these incomes are recognized as expenses.
As a result, the management company organizes accounting according to the scheme for providing paid services and performing work under a contract. Therefore, all receipts from the owners of premises are considered income of the management company, with the exception of those calculations in which the management company acts as an agent. This approach is used for both accounting and tax purposes. Details are in the resolution of the Federal Antimonopoly Service of the Far Eastern District dated January 29, 2014 No. F03-6635/2013.
Acts of acceptance of services provided and (or) work performed on the maintenance and current repairs of common property in the apartment building are signed by the chairman of the council of the apartment building (subclause 4, clause 8, article 161.1 of the Housing Code of the Russian Federation).
***
We are all more than just counting workers. Most of us are also residents of apartment buildings. Who, if not accountants, should participate in their management? Practice shows that among activists who control the housing and communal services sector on a voluntary basis, our colleagues are leaders.
Elena Dirkova,
Editorial Board of the magazine "Practical Accounting"
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