Audit Case Study Synopsis™ (811)
Savings (square foot)
Exclusive Service Provider
North American Portfolio
Our team’s audit covered multiple years, three (3) property manager changes, two (2) ownership changes and two (2) subleases.
After coordination with multiple entities, we were able to compile the complete set of financial history. Our team analyzed all financial records associated with the operation of the building and noted various accounting inconsistencies. The trend model prepared identified a substantial increase in expense liability subsequent to each change in property manager. It was shown that each new entity was double, and in some cases triple, billing the client. The errors were across numerous categories and sub-categories and were generally a sign of an overall mismanagement rather than the localized mistreatment of certain expenses. We noted the sources of the errors, rebuilt the accounting history and worked with each ownership group to secure refunds for all overcharged amounts.
Our team also analyzed the two (2) existing subleases associated with the location. Following a detailed audit of the original documents, applicable amendments and financial history at the location, our team determined that the client had been improperly billing its subtenants. Under one (1) sublease, the client’s outsourced lease administration firm had failed to escalate rent in accordance with the sublease for over four (4) years. Furthermore, while the landlord was sending the lease administration firm the electricity bills tied to the subtenant’s after-hours utility use, they were never being charged back to the subtenant for reimbursement. Under the second sublease the same lease administration firm failed to calculate and seek reimbursement for any additional rent charges as provided for in the sublease. The subtenant had a clearly defined base year, however no additional rent had been charged for five (5) years each of which was above the base year. Our team reconciled each respective sublease history, supported the back billing, applied any “carry over” credits from the landlord audits and collected the substantial reimbursements from the subtenants. Our team also developed a program and implemented financial models to be utilized for tracking and accurately calculating the reimbursements in the future.
Additional rent reconciliation