Audit Case Study Synopsis™ (7682)
Savings (square foot)
Exclusive Service Provider
North American Portfolio
Our team’s audit covered multiple years and two (2) changes in ownership.
At the outset of the audit, it became apparent that the correct pro-rata share was not being used. Our client had expanded within the building through multiple amendments each of which modified its share of the building. What the landlord failed to consider was that in many of these amendments, not only was additional space being occupied, but other spaces within the building were being terminated. The landlord was not reflecting the terminated spaces in the calculations and continued to increase the share without netting out the shares associated with the vacated spaces. It was also noted that there were numerous issues associated with taxes. A practice was developed whereby the taxes were being paid ahead of the payment schedule to take advantage of the early payment discount that was offered by the City of Philadelphia. However, this discount was not being passed on to the tenants of the building. It was also determined that the landlord was including the costs of business taxes from other owned entities in the operating costs of the building.
Furthermore, the landlord was not only passing through auditing, accounting and professional fees in connection with audits of the financial statements of other buildings within its portfolio, but also the fees associated with the preparation of the federal and state income tax returns for the respective partnerships. Our team also removed numerous sponsorships, club memberships, sports tickets and contributions that were paid by the landlord each year, but then accounted for as liabilities of the building. Lastly, it was also determined that every expense associated with the operation and maintenance of the parking garage was being passed through as an expense to the building although clearly excluded per the terms and conditions of the lease.
Real estate tax credits