Levy reconciliation

For levy reconciliation purposes, the total building permit levy received by a Registered Building Surveyor (RBS) can typically be separated into three categories:

Category 1: Levy collected but building permit not yet issued (including those cancelled or withdrawn before the building permit is issued)

Category 2: Levy collected, building permit issued, but the levy IS NOT DUE for payment to the VBA in the current month

Category 3: Levy collected, building permit issued, and the levy IS DUE for payment to the VBA in the current month.

One way to perform levy reconciliation is to check that the calculated levy amount (Category 3) due for payment to the VBA is equal to the levy amount in the levy return.

Levy reconciliation should be performed on the last day of the month, when no further transactions in the levy account occur, or any day after the end of the month.

The example below demonstrates the steps to reconcile a levy return for February 2014.

Step 1: Compare the levy account to the levy return amount

Prepare the levy return and obtain the total levy payable for February 2014 from the levy return. Then obtain the levy account balance (e.g. levy bank account or levy ledger account) on the day of reconciliation.

Assume that the levy reconciliation for February 2014 was performed on 3 March 2014:

Example:

Levy Account balance as at 3/3/2014 $2,393.05 (a)
Levy due for February 2014 according to the levy return $846.45 (b)
Difference $1,546.60

Note: Amount (a) should always be greater than or equal to amount (b). If this is not the case, it may indicate errors in the levy return amount and/or the levy account. It may also indicate that the building permit levy may not have been collected before the building permit was issued.

Step 2: Difference between the levy account and the levy return amount

Identify the individual levy items that make up the difference.

In this case, the difference is $1,546.60 as identified in Step 1. To facilitate this process, refer to the Levy Reconciliation Worksheet below.

Step 2.1: Obtain the levy account transaction details for February 2014 up to the date of reconciliation. (See Step 2.1 in the Levy Reconciliation Worksheet.)

Step 2.2: Obtain the building permit status for each of the transactions in the levy bank account for February 2014, including the building permit number and the building permit issue date. (See Step 2.2 in the Levy Reconciliation Worksheet.)

Step 2.3: Categorise each levy transaction into the three categories:

  • Category 1: levy collected, but building permit not yet issued (including those cancelled or withdrawn before the building permit is issued).
  • Category 2: levy collected, building permits issued, but levy not yet payable to the VBA. In this case, they are all the building permits issued after February 2014.
  • Category 3: levy collected, building permits issued and levy due to the VBA. In this case, they are all the building permits issued in February 2014. (See Step 2.3 in the Levy Reconciliation Worksheet.)

Step 2.4: Check that all of the levy transactions have been accounted for, by checking that the totals of Category 1, Category 2 and Category 3 equal the balance on the day of the reconciliation.

In this case, the combined total of all three levy transaction categories ($2,393.05) (or $1,360.00 + $186.20 + $846.45) equals the balance of $2,393.05 as at 3/3/2014. (See Step 2.4 in the Levy Reconciliation Worksheet.)

Step 2.5: Check that the results of the above steps agree with the amounts calculated in Step 1.

Example:

Levy bank account/levy ledger account balance as at 3/3/2014 $2,393.05 This amount agrees to the total of category 1, 2 & 3
Levy due for February 2014 according to the levy return $846.45 This amount agrees to the total of category 3
Difference $1,546.60 This amount agrees to the total of category 1 & 2

The difference of $1,546.60, as identified in Step 1, has been reconciled. This difference is made up of levy transactions relating to Category 1 and Category 2. This can be clearly demonstrated by preparing a Levy Reconciliation Statement.

Levy Reconciliation Worksheet for the month of February 2014

Levy Reconciliation Worksheet for the month of February 2014

Step 3: Prepare Levy Reconciliation Statement

Using the results from Step 2, refer to the Levy Reconciliation Statement example below on how to prepare it.

Levy Reconciliation Statement for the month of February 2014

Levy reconciliation statement for the month of February 2014