What is RERA AUDIT?RERA (Real Estate Regulatory Agency) a government agency responsible for the formulation of rules and regulations for various real estate activities in Dubai requires that all developers registered with RERA should have an ESCROW account and conduct an independent audit to identify the completion status of the project regarding the progress of construction. RERA also requires an annual submission of the audit report for all completed projects from registered developers. The RERA audit can be divided into three segments.
1. Operational Audit:The examination of the control environment in which an entity carries on its business with the objective of increasing its efficiency and effectiveness.
2. Financial Audit:Financial audit includes the examination of:
- Total number of unit sold, total cash received from buyers and number of units cancelled.
- Total amount received from financial institutions for the project.
- All payments including cost of land, registration fee, oqood, etc.
- All other payments including construction, management and marketing related expenses.
- Issuance of advances to contractors and other parties in cash.
- Issuance of advances to contractors and other parties in the form bonds and other financial instruments.
- Retentions money which should be equal to 5% of total funds received.
3. Compliance Audit:To review and verify that developers activities are in compliance with the laws and regulation defined by the Real Estate Regulatory Agency (RERA).
Basic Laws Relating RERA Audit:The basic laws relating developers about the audit are:
- According to article 5 of the rules, the RERA will have all the rights to monitor and supervise the activities of developers and Owners Associations and audit their books of accounts and records.
- According to the article 6 of the rules, certified financial statements containing budgeted cost and revenues of the project should be presented for opening of escrow account.
- An ESCOW agent must provide regular details of revenues and expenditures of his ESCOW accounts. The department can demand from its ESCOW agent to present any information or data at any time and the department can order for audit of such information from an independent auditor if it is necessary.
- In case RERA cancel a project, RERA will appoint a certified auditor to examine the current financial position of the project, the total amount deposited into the ESCROW account and verification of all expenditures.
How A&A Associate Can Help You in RERA Audit:A&A Associate has its sister concern which is an approved and listed audit firm with Dubai & Land Department, our members are well known for their skills and expertise in identifying, analyzing and make strategies for complex problems in real estate and provide perfect solutions. Our Services includes:
- Critically analyze and identify the project’s completions status according to the applicable rules and regulations.
- As a registered firm with the Land Department, we assist RERA in developing audit reports for underdeveloped projects.
- Preforming real estate audits for completed and underdeveloped projects including financial, operational and compliance audits.
- Performing internal audits to assist the developers to get an insight into their business financial health and identify the risky areas and provide solutions to overcome the risk factors.