Audit Case Study Synopsis™ (866)

Project
Washington, DC

Industry
Legal

Savings (total)
$915,860
Savings (square foot)
$4.80

Audit Accuracy™
88.73%
Audit Timeline™
113 days
Audit Timespan™
74 days
Audit Return™
$4.80

Campaign Commencement
Q4 2002
Representation Type
Exclusive Service Provider
Campaign Scope
Global Portfolio
Audit Cycles
Annual-Recurring

This audit covered the review of the books and records of three (3) ownership entities and two (2) property management organizations.

Our team’s audit revealed that the significant errors were made in a wide variety of operating expense and cost categories including, but not limited to, security, insurance, electricity and repairs & maintenance. Following a review of the building records and interviews with the building asset manager it was determined that the landlord was using inconsistent methods in accounting for costs incurred in the operation of the building. Although not supported by the lease or the applicable amendments, the landlord was independently switching between cash and accrual accounting during each of the periods under audit review. Our team remodeled the annual cost records and removed all expenses that had been double booked, translating into substantial savings for each year under review.

It was also noted the overtime HVAC reimbursement credits were being calculated incorrectly. It was determined that the landlord was varying the hourly rates and the framework and methodology for how credits were to be quantified and allocated to the operating costs of the building. The discrepancies between methods used in the base years and those outside the base years amounted to the landlord collecting considerably more than was actually being incurred for this category. Following the audit, our team supported that expense categories and subcategories for each of the two (2) base years had been drastically understated due to the landlord “holding” certain expenses until the base year periods had elapsed. These practices were noted, supported and adjusted allowing each of the individual base years to be reset to normalized and accurate levels the impact of which would generate additional material savings through the remainder of the lease term.

Repairs & Maintenance
Security
Insurance
Electricity
HVAC
Accounting methodology
Base year determination/validation

 
 

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