Audit Case Study Synopsis™ (457)

Project
New York, NY

Industry
Financial Services

Savings (total)
$2,052,642
Savings (square foot)
$6.13

Audit Accuracy™
80.29%
Audit Timeline™
68 days
Audit Timespan™
50 days
Audit Return™
$6.13

Campaign Commencement
Q1 1998
Representation Type
Exclusive Service Provider
Campaign Scope
North American Portfolio
Audit Cycles
Annual-Recurring

Our team determined through the course of the audit that the landlord was charging through all costs associated with Americans with Disabilities Act (“ADA”) compliance even though the lease directly excluded costs of alterations and improvements made to cure violations of laws and requirements of public authorities where violations existed prior to the commencement date. It was also noted that the management fee calculation structure being implemented was flawed.

The annual increase in the management fee was supposed to be determined by applying the percentage increase in the Consumer Price Index for All Urban Consumers (“CPI-U”) from the same period the previous year. However, the landlord was calculating the annual index difference and using that static number as the percentage rather than calculating the percentage increase accurately. This error was artificially accelerating the increase rate for the management fee expense category. The audit also revealed that the landlord was including in building expenses all costs associated with corporate overhead including, but not limited to promotional fees, charitable contributions, meals and entertainment. Furthermore, the landlord was involved with the redevelopment of a public park project (not related to building) and was categorizing all design, architectural and planning fees as operating costs of the subject building.

Americans with Disabilities Act (“ADA”)
Professional fees
Management fee increase calculation
Corporate overhead
Non-building related expenses

 
 

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