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Lakewood Terrace has 52 units in total – 28 in an apartment building (one and two bedrooms) and 24 townhouses (two and three bedrooms). Four of our units are modified for people who use wheelchairs. The apartments have either a balcony or a small yard, and the townhouses have courtyards. The co‑op was first occupied in 1983.
The co‑op completed a major building envelope and piping remediation in 2006. Around 2010, we finally noticed that the audit fee had remained high ($16,000 for a 52 unit co‑op) even though the mortgage draws were complete and the term payments had been set for quite some time.
Our Finance Committee questioned the auditor and was told that our audit was more expensive because of our workout and the recent changes in national requirements for auditors.
Lakewood Terrace decided to seek some competitive quotes. We asked for recommendations from our property manager and several other co‑ops that had gone through workouts. We also asked the Agency for Co‑operative Housing for a list of all auditors experienced with co‑op housing workout agreements. A list of five audit companies was compiled, and quotes were sought.
The co‑op provided a brief history of factors that increased the complexity of our financial position: a workout agreement, three mortgages and a loan from BC’s Homeowner Protection Office for building-envelope repairs.
Two of the auditors declined to bid, as they had a full roster of co‑op clients already and could not take on a co‑op with our year end. Three audit firms provided quotes, including our existing auditor who eventually offered to reduce the audit fee from $16,000 to around $8,000. The other two quotes were for $6,000 and $6,800. The auditors asked for fairly uniform information – previous audited financial statements, current income statement and a balance sheet.
The Board researched the two new quotes and confirmed that both auditors had experience with workout agreements and an extensive background in co‑op housing. At the spring budget meeting, the Board recommended that the members approve the appointment of the auditor with the lowest bid. The members approved the motion and the new auditor delivered the audited financial statements that fall.
The auditor transition went well. The Board did a fairly detailed comparison of the financial statements from the previous auditor, and there were some adjustments, but it was largely a smooth process.
If we could go back and do anything differently, it would be to review all longstanding contracts every three years or so and seek competitive bids as a regular practice. It was only when a member with an accounting background noticed that the audit fee seemed high that it came to our attention. Re-tendering the service from time to time would probably have saved us more than half the audit fee much sooner.
Seek competitive bids as a regular practice, even for longstanding contracts.
| Co‑op name: | Lakewood Terrace |
| Location: | Vancouver, BC |
| Program: | Section 95 |
| Number of Units: | 52 |
| Unit Type: | Townhouses and Apartments |
| Date of Occupancy: | 1983 |
| Management Model: | Management Company |