What are the common issues identified during RERA audits?

The compliance and transparency of the rules in the Dubai’s real estate sector therefore require to be audited by RERA (Real Estate Regulatory Agency). These audits entail various types of audits that are general, manager, financial, operation, compliance and integrated audits. Below are some common issues identified during RERA audits, along with best practices to address them:

Inaccurate Financial Reporting

Another problem found in companies when audited under RERA is failure in the accurate or even provision of proper financial statements. This comprises, poor revenue recognition practices, reporting of wrong expenses, and poor record keeping of every financial transaction.

Best Practice: It is important to make sure that all the records concerning the financial aspect of the project are kept as clean as possible and are updated frequently. Implement frequent internal checks with involving only approved auditors of RERA checking and revising the financial reports.

Decision concerning the failure to observe the standards provided by Escrow Account Regulations

Controversies with connection to the management and reporting of escrow accounts are usually experienced by developers. Accounts linked to such sales, include those with check lists whereby the buyer pays with check to a neutral third party who is supposed to iver it to the seller’s account, mismanagement of such accounts like withdrawal of the checks in the seller’s account without necessary depositing them to the escrow account to reflect the amounts from the buyers.

Best Practice: Follow the rules pertaining to the escrow account as outlined by RERA to the letter. Conduct periodic reviews of escrow account reports to examine all the transactions made with a view of ascertaining whether they are in compliance with the laid down legal provisions and that all the financial records are genuine.

Operational Inefficiencies

Management operational audits often reveal some levels of inefficiencies in management of real estate projects. These may be delay in undertaking scheduling, poor project management practices, and failure to meet regulatory measure.

Best Practice: This includes the use of valid project management methodologies and the holding of routine checkups to monitor that goals are chocked within expected time. The measures for continuing professional development can also increase the efficiency of operations in staff through compliance and the use of best practices.

Issues with Owners’ Associations

Some difficulties are observed concerning the management and financial accounting of the owners’ associations. This involves wrong allocation of service charges, poor financial allocation and poor accounting.

Best Practice: Make sure that there is appropriate governance in owners’ associations. The following are some of the ways that would enable proper management of service charges; Performing scheduled reviews of charges in the provided services and being accountable in the financial records to gain the confidence of the property owners.

Incomplete or Incorrect Documentation

Almost invariably, auditors come across various documents and records kept in relation to real estate transactions, project clearances and compliance reports where information is often either lacking or erroneous. This situation in turn tends to create serious compliance problems.

Best Practice: Ensure proper documentation of the firm’s activities and compliance in relation to all the financial transactions as well as other correspondences in the firm. Organise documents electronically and make sure that every document is ready for the audit since all papers should always be retrievable.

Non-adherence to RERA Regulations

This is contrary to the requirements that have been set forth by RERA in terms of the law as well as the regulations. This entails delay in completion of a project, cases of non-adherence to constructing code of ethics, and contractual disputes involving the project.

Best Practice: Know the current changes in RERA rules and policies, so as not to violate it in any operations of the company. It is important for the staff to be trained with reference to the regulatory changes and compliance standards.