Importance of a Financial Audit
Whether it’s a new project launched by a developer or an established property managed by an owners’ association, considerable profit may be lost due to inaccurate cost increases, construction overruns and even potential fraud
It’s rarely the case that errors are made deliberately as they are usually the result of incompetence, or are rushed because of time constraints. Real estate professionals lead busy lives and are often overrun with the myriad of daily tasks they need to perform, which often overshadow the importance of getting the financials in order.
The end result of all these miscalculations and oversights can lead up to a massive loss over the course of a financial year. Property owners are losing out by handing over unnecessary service charges and other associated costs, while real estate developers may be losing out by inaccurate construction overruns. When you add these up over a 5 or 10 year period, the difference to the bottom line may be astronomical.
Developers and property owners in this situation can benefit greatly from a financial audit on any new project or established building. To potentially save a project from massive financial loss a yearly accounting audit should be completed in order to discover any errors and leave no stone unturned.
A team of professionals is usually required in such cases, which contains experts from a range of fields including accountants, lawyers, engineers, corporate real estate managers, architects and possibly even IT experts. In many jurisdictions the auditor must be approved by the local real estate authority before being authorized to conduct a financial audit of ongoing real estate developments as well as established properties’ accounts.
A team of such experts should be able to objectively and comprehensively gauge the operating expenses of a project, or determine the ongoing expenses and allowable claims of an already established residential or commercial property that is controlled by an owners association.