Audit Case Study Synopsis™ (335)

Project
San Francisco, CA

Industry
Banking

Savings (total)
$1,448,602
Savings (square foot)
$7.81

Audit Accuracy™
98.53%
Audit Timeline™
141 days
Audit Timespan™
106 days
Audit Return™
$7.81

Campaign Commencement
Q4 1999
Representation Type
Exclusive Service Provider
Campaign Scope
North American Portfolio
Audit Cycles
Annual-Recurring

Our team’s audit covered multiple operating years and two (2) ownership entities.

Upon the commencement of the audit, we noted that the insurance amounts charged during the base year were not presented in a manner consistent with that of the subsequent years. Following a review of the support for each annual policy and interviews with the carriers and insurance brokers it was determined that the insurance expenses were not completely recorded. The amounts actually recorded were solely based on amounts paid in the base year as opposed to the amounts applicable to the base year. Our team also discovered that the entire staffing model was altered due to a change in the ownership entity. Numerous individuals were added to the on-site staff operating the building thus drastically affecting many general ledger accounts, however parallel adjustments, as required by the lease, were not made to the base year.

The new ownership entity also owned additional buildings throughout the city and the audit uncovered that certain expenses related to these additional buildings were being captured and passed through in the subject building under audit. Our audit team supported each sub-category expense and built an appropriate allocation schedule to be applied to the expenses in question. Our team also adjusted the management fee charged in each year. The expense in the base year was adjusted significantly upward as our team was able to negotiate to have the free rent, which was granted as a leasing incentive for the client to occupy the space, included in the calculation of the base year management fee.

Furthermore, for each subsequent year, our team removed all revenues associated with utility reimbursements and made a consistency correction due to the landlord changing the calculation method from “revenues billed” model to “revenues collected” model following the ownership change. The landlord agreed to adopt the audit methodology generating additional, annual savings through the remainder of the lease.

Insurance (Other)
Base Year – General (Combined)
General Administrative (Payroll)
Accounting – General (Ownership Change)
Accounting – General (Allocations)
General Administrative (Management Fees)

 
 

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