Formerly little framed, the accounting of the co-ownership provided by trustees is now subject to strict rules. Double entry accounting is one of them. How does this accounting rule work and what benefits does it represent for the trustee? Here are some explanations.
Double-entry accounting, what is it?
Double entry accounting is a accounting technique which, as its name indicates, the writing is done in two stages. Thus, the movements debit and credit appear on separate accounts. A debit line on one of the accounts therefore appears symmetrically as credit on another, and vice versa. This method is very commonly used by organizations and companies.
Double entry accounting also relies on the concept of accounting balance. Thus, sound accounting will be the sum of all accounts with a debit balance equal to the sum of all accounts with a credit balance. It is said that the balance is balanced.
Mandatory within the syndics of condominiums since the decree of the law SRU entered into application in 2006, the accounting in double part is however not imposed on the small co-ownerships of less than 10 lots and therefore generally not to the voluntary co-ownerships which can have recourse to a so-called cash accounting or simplified accounting.
Advantages and disadvantages of double-entry bookkeeping
Double-entry bookkeeping is multiplying accounting entries, which may seem compelling. However, this rigor makes it easier for self-audits or those carried out by the tax administration, for example: the accounting of all flows makes it possible to quickly highlight an error if the accounting balance is not balanced.
For example, an unpaid rent or the invoice of a craftsman who is on standby will be immediately highlighted.
In other words, double-entry accounting allows:
- Reduced margin of error
- More security
- A clearer accounting reading
Accounting in business as in a condominium can not be improvised. This requires rigor and strict rules. So does the good financial health of the structure.
If you are a manager, the use of software can prove to be an effective help as well as the advice of a co-owners association.