Accounting for service charges in the UK commercial sector: Barriers to change and the quest for best practice
Abstract
Purpose
The purpose of this paper is to examine the issue of compliance with a voluntary professional Code of Practice. It aims to take service charge management as its subject and it also to discuss how current notions of “best practice” have evolved in order to explain the poor performance uncovered. From this it seeks to derive an alternative perspective and develop a new framework for managing agents to consider utilising in order to advance the generalised principles within the existing RICS Code of Practice, Service Charges in Commercial Property.
Design/methodology/approach
The paper applies an inductive reasoning by applying best practice from other disciplines (the specific) to commercial property (hence arguing for their adoption to the general). It utilises a critical review of the secondary literature on the wider aspects of best practice and original data on commercial service charge management to devise an ideal type framework for accounting for service charge moneys.
Findings
It provides an idealised conceptual framework for managing agents to consider applying to their management of the service charge process, specifically with regard to accounting issues therein. The paper is not proposing a definitive adoption of accruals accounting, but provides an analysis of the potential advantages – and problems. The intention of this work is to drive consultation for better practice, rather than provide a de facto template for adoption.
Originality/value
The work relies on data previously generated by the authors, and produces an original template and example for the practitioner. The work's primary value is that it proposes an innovative approach to the occupation of the commercial service charge manager. Within this, it also offers advice to the wider profession on how to better regulate the discipline. While the proposed approach offers advantages over the existing best practice paradigm, it generates its own conceptual problems that will need to be considered by professionals.
Keywords
Citation
Holt, A., Eccles, T. and Bennett, K. (2011), "Accounting for service charges in the UK commercial sector: Barriers to change and the quest for best practice", Property Management, Vol. 29 No. 1, pp. 7-33. https://doi.org/10.1108/02637471111102914
Publisher
:Emerald Group Publishing Limited
Copyright © 2011, Emerald Group Publishing Limited