Audit Case Study Synopsis™ (14523)

Project
Houston, TX

Industry
Energy

Savings (total)
$2,658,962
Savings (square foot)
$5.87

Audit Accuracy™
99.80%
Audit Timeline™
86 days
Audit Timespan™
61 days
Audit Return™
$5.87

Campaign Commencement
Q3 2004
Representation Type
Exclusive Service Provider
Campaign Scope
Global Portfolio
Audit Cycles
Annual-Recurring

Our team’s audit review was conducted across multiple operating years and was based on the various, legacy lease agreements with staggered commencement dates.

There were several buildings included in the audit along with a hotel property and numerous garage properties. The audit identified a number of major accounting issues that directly impacted the economics of the project and the resulting savings. We found that the cost allocation methodology being used by the landlord to assign expenses to different properties within project was incorrect. The team reallocated the costs of shared services accurately across the applicable properties and the ownership structures. We also noted and adjusted several expenses that qualified (for various reasons) as capital expenditures according to Generally Accepted Accounting Principles (“GAAP”), but were being booked as building expenses. Further, the landlord was misinterpreting and thus misapplying the cap framework defined in the leases. After analyzing the data, our team derived the proper “cap” application method taking into consideration the appropriate periods and expense categories covered. The proper application of the “cap” resulted in a drastic decrease in the expense exposure not only in the subject years, but also throughout the lease term.

Cost allocations
Capital expenditures
Expense “cap” application

 
 

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