03 February 2026
Why Missing Money Is Not Always Obvious
When people think about fraud in a strata company, they often assume it would be easy to detect: an unreconciled bank account, or an expense that simply looks wrong in the income and expenditure report. In reality, those are the obvious cases, and they are not the ones that tend to persist.
More sophisticated fraud relies on the expectation that most owners and committee members will only look in familiar places. If the bank account reconciles and the current year expenses appear reasonable, there is usually a sense of comfort that nothing is amiss. Unfortunately, that confidence can be misplaced.
One of the less obvious methods involves manipulating timing rather than cash, and it can be surprisingly effective.
How Timing Can Hide Inappropriate Transactions
A common assumption is that if money is paid in the current financial year, it will appear as an expense in the current year’s income and expenditure report. That is generally true, but it breaks down when an invoice is deliberately backdated into a prior financial year.
When this happens:
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The expense does not appear in the current year’s income and expenditure report;
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The bank reconciliation can still balance perfectly;
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The impact is absorbed into the balance sheet, usually through owners’ funds or equity.
To someone reviewing monthly financials, there is often nothing that looks out of place. The payment has cleared the bank, the reports balance, and there is no unusual expense line to query.
The Manual Check That Often Reveals the Issue
In reviews we have been asked to assist with, this is one of the more frequent ways inappropriate transactions are hidden, and it is a real risk for strata companies.
Often, the only visible clue is that the opening owners’ funds or equity balance for the new financial year does not match the closing balance that was approved by owners at the prior AGM.
This discrepancy is easy to miss because many people rely on regenerated system reports. Those reports will reflect whatever data currently sits in the accounting software, including any backdated adjustments. The comparison that actually matters is against the saved PDF financial statements that were circulated with the AGM notice and formally adopted by owners.
Without that manual comparison, the change can sit unnoticed on the balance sheet indefinitely.
A Practical and Realistic Safeguard
This is not something that anyone would reasonably monitor month to month. However, performing a simple year-end check can provide a meaningful safeguard.
Confirming that the opening owners’ funds align exactly with the prior year’s AGM-approved financials helps ensure that no retrospective changes have been made without proper disclosure or authority. Where differences exist, they should be queried and supported with clear explanations and documentation.
As always, this information is general in nature. Where concerns arise, strata managers and committees should seek professional advice as early as possible.
Quick Takes
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Fraud is not always visible in income and expenditure reports.
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Backdated supplier invoices can avoid detection while bank reconciliations still balance.
- Owners' funds mismatches are often the only clue.
- Comparing opening balances to AGM-approved financials is a simple control.