Real Estate Audits: Independent Assurance for Better Decisions

Assurance Services

Dohan CPA provides real estate audits for commercial and residential property owners, developers, investment entities, family offices, funds, joint ventures, lenders, and property managers. Our objective is credible property and entity-level reporting that supports lenders, investors, partners, acquisitions, and operating decisions. This guide explains when the service may be needed, what the engagement addresses, how the process works, and how management can prepare.

Who real estate audits are for

Dohan CPA's real estate audits are designed for commercial and residential property owners, developers, investment entities, family offices, funds, joint ventures, lenders, and property managers. The engagement is organized around the reporting needs of the people who will actually use the statements, rather than treating the audit as a generic year-end exercise.

The intended result is credible property and entity-level reporting that supports lenders, investors, partners, acquisitions, and operating decisions. Management remains responsible for the financial statements, underlying records, estimates, controls, and representations; the independent CPA is responsible for planning and performing the engagement and reporting in accordance with the applicable professional standards.

When an audit may be needed

Audits are often driven by loan agreements, investor or partnership terms, fund governance, acquisitions, regulatory arrangements, or owner oversight. The engagement should identify which entities and properties are included and what basis of accounting and reporting deadline apply.

Before accepting a timetable or quote, identify the reporting entity, fiscal period, financial reporting framework, intended users, required report language, delivery date, and any compliance or supplemental schedules. A requirement in a loan, contract, statute, regulatory agreement, or governing document should be read directly rather than summarized from memory.

What makes this engagement different

Real estate financial statements combine property operations with financing, ownership, development, leases, valuations, and complex legal structures. A useful audit begins with clarity about the reporting entity, consolidation, applicable accounting framework, intended users, and whether reporting is on GAAP, tax, fair-value, or another basis.

A strong engagement therefore combines technical accounting, industry knowledge, disciplined project management, and timely communication. The audit is more efficient when key schedules reconcile before fieldwork and questions are routed to people who understand the underlying transaction.

Areas commonly addressed

The scope is risk-based and tailored to materiality and the applicable standards. Common areas include:

• Rental and other property revenue, tenant receivables, concessions, recoveries, and lease incentives
• Property acquisitions, development costs, construction in progress, capitalization, placed-in-service dates, and depreciation
• Debt, escrows, reserves, covenant calculations, derivatives, guarantees, and refinancing activity
• Entity structure, consolidation, variable interests, joint ventures, noncontrolling interests, and related parties
• Impairment indicators, fair-value measurements, investment-property reporting, and significant estimates
• Property-manager reports, cash controls, security deposits, commitments, contingencies, and subsequent transactions

Our audit approach

The exact procedures vary with assessed risks, but a well-managed engagement commonly includes the following work:

• Map legal entities, ownership, bank accounts, property managers, debt, and the financial reporting entity
• Understand lease administration, cash receipts, purchasing, capital projects, financing, and close controls
• Test rent and other revenue, receivables, operating expenses, security deposits, and management fees
• Evaluate acquisitions, development and capital costs, depreciation, impairment, valuations, and disposals
• Confirm debt and material cash balances and test covenants, escrows, reserves, guarantees, and related parties
• Review subsequent leases, refinancings, acquisitions, sales, casualty events, commitments, and distributions

What the audit does and does not provide

A financial statement audit is designed to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud, and to support the auditor's opinion. Reasonable assurance is a high level of assurance, but it is not absolute assurance and an audit is not a guarantee that every error, control deficiency, improper payment, or instance of fraud will be found.

An audit also does not replace management's responsibilities, provide legal advice, determine the value of a business or property unless separately engaged, or predict future results. Findings and recommendations should be evaluated in the context of the engagement's objective and the organization's risk tolerance.

A practical timeline

Planning should begin before year-end. During planning, confirm scope, independence, deadlines, material locations, confirmation contacts, specialists, prior findings, and client-prepared schedules. After year-end, management closes the books and delivers reconciled schedules. The CPA performs fieldwork, communicates open items, evaluates adjustments and disclosures, obtains representations, and issues the report after all required evidence and approvals are complete.

Calendar time depends on readiness and responsiveness as much as auditor hours. Missing reconciliations, changing trial balances, incomplete contracts, slow third-party confirmations, and late legal or governance information are common causes of delay.

Why work with Dohan CPA

Dohan CPA brings the perspective of a full-service CPA firm serving South Florida businesses, organizations, owners, and high-value individuals. The objective is a technically sound engagement with direct communication, practical request lists, visible responsibility, and attention to the decisions the financial statements must support.

A proposed engagement should be finalized only after Dohan CPA confirms that the service is within the firm's current capabilities, independence requirements, licensing, staffing, and quality-management procedures.

Frequently asked questions

Can one audit cover several properties?

Potentially. The answer depends on legal ownership, reporting requirements, consolidation conclusions, lender or investor terms, and whether combined or consolidating schedules are acceptable to users.

Does an audit determine property market value?

No. A financial statement audit is not an appraisal. Auditors evaluate accounting and disclosures for fair-value measurements or impairment when relevant, but they do not automatically provide an opinion on market value.

Which basis of accounting should be used?

That depends on user requirements and governing agreements. GAAP, income-tax basis, fair-value reporting for qualifying investment companies, or another special-purpose framework may be appropriate. Decide before records and disclosures are prepared.

Why are lease abstracts important?

They summarize terms that drive rent, escalation, concessions, recoveries, options, deposits, and other accounting. Abstracts should be reconciled to signed leases and the property system.

What if a property manager keeps the books?

Management remains responsible for the financial statements and controls. Obtain system reports, bank access, contracts, reconciliations, service-organization information, and a clear schedule of responsibilities.

When should acquisitions and refinancings be discussed?

As soon as they are contemplated or completed. These transactions affect scope, confirmations, valuation, debt classification, costs, disclosures, and the audit timetable.

Authoritative sources

• FASB: Accounting Standards Updates Issued - Financial Accounting Standards Board
• AICPA: What is the difference between a compilation, review, and audit? - AICPA & CIMA
• FASB: Revenue Recognition - Financial Accounting Standards Board

General educational information only. This page is not accounting, auditing, tax, investment, or legal advice and does not create a CPA-client relationship. Requirements and standards can change and depend on specific facts and agreements.