Audit-Readiness: Squashing Risk with Tech Enablement

Understanding External Audits

‍

In property management, the word "audit" has negative connotations for a reason. Accounting books are often overlooked due to immediate operational or growth demands. Given the constant influx of tasks and responsibilities, it's challenging to prioritize unseen risks. To further complicate matters, the term audit itself carries a few different meanings. Today we’ll take a closer look at property management external audits to better understand their implications, and how to remain vigilant in preparation to protect your business.

‍

While the exact process of external audit is dependent on state of operation, in general it is a state level investigation of a property management company’s licensure, record keeping precision, handling of funds, and security implemented to protect sensitive information. A particular focus is placed on the trust banking aspect of the company’s data – the records used to confirm compliant handling of entrusted money, such as rent revenue, security deposits, and owner equity awaiting disbursement.

‍

Why Audit-Readiness is Critical

‍

External audit is an often avoided topic until one is actively occurring, and at that point the damage may be done. Through understanding the process, preparation becomes exponentially easier to maintain. Knowing that the books aren’t clean is the first step to compliance. State auditors will examine the books to ensure they are tied down at three points, which are reviewed below. It is guaranteed that undergoing state audit is a resource-intensive and time-consuming process, so any advantage in accelerating the investigation and avoiding questionable entries and balances will significantly reduce impact. 

‍

At best, a failed audit will be expensive. At its worst, it can be devastating. Depending on the number and nature of violations clocked, Real Estate Brokerage licenses can be suspended or permanently revoked, and, in extreme cases, staff members could face imprisonment. Rapidly, the often unseen-risk in disorganized record keeping becomes clear.

‍

Let Tech Do the Heavy Lifting

‍

In the age of human-powered services, tech-enablement has once again risen to the surface in a B2B integration dominant economy. Humans know best when it comes to judgment calls, but the limitations of bandwidth and human error are real. Focused on technical expertise, deep knowledge of the software we support, and continuously improving our internal efficiencies, APM Help is proud to join the Buildium Integrations Marketplace, bringing our tech-enablement to the next level with the Triple Tied Out Daily Audits application.

‍

By connecting this tool with their Buildium account, property management professionals can gain immediate insight into the financial health of their trust banking records, which are checked from the perspective of a state auditor. Let’s take a look at the three categories of trust banking compliance, and the visual insights the integration provides:

‍

1. Daily Bank Reconciliations – never lose track of missing or duplicate entries. Are you reconciled to date?
2. Tenant Liabilities – maintaining compliance is key, and tenant liabilities are a key indicator in an audit event. Is your company compliant on all active leases? Are all the past leases closed out properly? How about inactive properties and old bank accounts – are those zeroed and closed precisely?
3. Portfolio Balances – the lifeblood of trust banking. This tie-down ensures that the money your clients expect is there at all times and that any mistakes are quickly unearthed. Is the Rent Trust balance overstated? Are your client’s funds commingled?

‍

‍

In each check, a simple color coded highlight system calls attention to any instances of noncompliance and how severe the issue is. By having this information readily available, companies can proactively address any potential audit violations and make informed decisions regarding their financial operations. Above, the transition from violation to compliance is clear, with the tenant liability and portfolio balance fails being addressed and eventually moving from failing to clean or in a yellow warning status – something to keep an eye on, but which would not cause an audit violation.

‍

Here you can see an example details page and how it calls the noncompliant transactions and balances to attention with just a couple clicks.

‍

‍

‍

By leveraging APM Help's audit tool, property managers are able to home in on the key issues in their books, empowering them to make decisions about their business with confidence. Don’t leave audit-readiness to chance! Check out Triple Tied Out Daily Audits in the Buildium Marketplace today and take control of your company’s future.

‍

For more information about APM Help or the Buildium software visit apmhelp.com/buildium or contact APM Help’s team of experts here.