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Going through a real estate audit can be\u00a0scary if you don’t know what to expect or what to do. \u00a0You can save yourself a lot of stress if you arm yourself with the right tools and reports\u00a0that demonstrate your\u00a0compliance with even the strictest requirements.<\/p>\n
Property management audits are designed to ensure your business complies with your state’s real estate reporting\u00a0and accounting principles. If your business is going through an audit by your state’s real estate commission, Rentec Direct is here to help with the\u00a0Audit Assistance Service. \u00a0We will guide you through accessing the right reports to provide your auditor and ensure the process is as painless as possible.<\/p>\n
Here you will find more information about property management audits and helpful resources for your success, including:<\/p>\n
In simple terms:\u00a0An evaluation or examination by a person or group. <\/i><\/b>\u00a0<\/span><\/p>\n Audits are made to check something such as your documents\/recordkeeping. \u00a0Simple right? \u00a0It is actually quite a painless process if you have your record-keeping in order. \u00a0Property management software can help you stay organized and be ready!<\/p>\n The majority of auditors are not out to get you, they are looking to see if you and your team have acceptable accounting principles and you comply with your local real estate regulations.<\/p>\n Red Flags<\/em>\u00a0<\/strong>–\u00a0Negative cash balances and irregular fees could be warning signs of inefficiencies, non-compliance, and mismanagement. \u00a0<\/span><\/p>\n Auditors look for seamless continuity. \u00a0It is important that you invest a little time in the beginning to know your financial reports inside and out and to really know your business.<\/p>\n Properly managing trust account balances (referred to as Trust Accounting) is a serious responsibility. \u00a0Monthly reconciliations ensure funds are available to satisfy all obligations to owners and tenants. \u00a0Funds like pre-paid rents, security deposits, non-refundable deposits and other reserves or undistributed income must be managed appropriately.<\/p>\n You probably have performed a two-way reconciliation at some point when you balanced your checkbook. \u00a0\u00a0You compare the latest bank statement (the \u201cbank balance\u201d) to your check register (the \u201cbook balance\u201d) \u00a0and adjusting for checks or deposits that have not yet cleared. \u00a0If you and your bank balances match you have reconciled.<\/p>\n When managing a trust account you have two sets of ledgers, the check register (the book balance) and the individual client ledgers. The check register balance is a balance of the entire bank account, while the client’s ledgers are balances of each client\u2019s trust funds within the account. \u00a0The sum of the individual client ledgers (client ledger balances) must total the same as your book balance and your bank statement (bank balance).<\/p>\n Your bank balance must equal your book balance, which in turn must equal your trial balance (your list of escrow balances). \u00a0The formula is simple, however, at times it can become challenging and makes some of us want to run and hide.<\/p>\n If you forget to post a bank charge, returned item, or any error can make reconciling difficult. \u00a0Even though tedious and frustrating at times, it is a required task by state and federal guidelines. \u00a0It is important to reconcile every month in order to find any errors and resolve them quickly. \u00a0Failure to reconcile in a timely manner could create a negative financial impact of any losses arising out of fraudulent transactions against your trust account. Knowing your business and have the right documentation to share if there is anything that might look questionable to your auditor. \u00a0Keep in mind what you might know today you could forget tomorrow. \u00a0\u00a0So notes and documentation are very important so you are prepared in the future and don\u2019t have to try to remember what happened days, months or a year ago.<\/p>\n The auditor will examine checks and balances throughout your accounting system to determine if you and your team are reconciling transactions each month. Your property management software will help compile 3-way reconciliation for you.\u00a0<\/span><\/p>\n Download a Sample 3-way Reconciliation Here:<\/strong><\/em>\u00a0Sample 3-way Reconciliation Worksheet<\/a><\/p>\n Typically auditors will give you a complete list in advance of necessary reports and items they would like to review. If they do not here is a list to get you started:<\/p>\n Download the Audit Checklist Here:\u00a0Audit Checklist – Rentec Direct – Audit Assistance<\/a><\/p>\n Access these reports in your Rentec Direct account that will\u00a0assist you in completing monthly reconciliations and surviving an audit.<\/p>\n In order to survive an audit, it is very important that you print these reports every month to ensure proper reconciliation of your records and to provide proper documentation during an audit.<\/p>\n Download the Audit Assistance – Rentec Audit Reports Checklist Here :\u00a0Audit Assistance – Rentec Audit Reports Checklist<\/a><\/p>\n Rentec Direct will happily guide you through your audit to help you find the necessary reports that demonstrate your compliance with your state’s real estate commission accounting guidelines and principles.<\/p>\n Please call to schedule an appointment 800-881-5139 or email support@rentecdirect.com.<\/p>\n Rentec PM software is certified<\/a> by the strictest states to do trust accounting correctly and provide the necessary reports in the event of an audit.<\/p>\n You can confidently face an audit knowing you will have no issues with trust account compliance when using Rentec Direct’s accounting features to manage your portfolio, including three-way-reconciliation between trial balance reports, bank reconciliation reports, and general ledger reports.<\/p>\nWhat is 3-way Reconciliation?<\/span><\/h3>\n
Audit Checklist – Reports You’ll Need During An Audit<\/h3>\n
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Rentec Direct – Auditing Assistance<\/h2>\n
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\n(*If you manage your company funds in Rentec)<\/li>\nNeed further auditing assistance?<\/h3>\n
Try Rentec Direct’s Audit Assistance Service<\/h3>\n
Did you know Rentec Direct is Trust Account Certified?<\/h3>\n