Real Estate Regulatory Agency (RERA) Audits in Dubai
Real estate can be defined as property in the form of land or building. It is one of the rapidly emerging business sectors in the UAE. The companies dealing in real estate are required to comply with all the laws and regulations applicable in the UAE. Real Estate Regulatory Agency (RERA) is a government agency that was established in 2007, and is responsible for regulating the real estate business sector in Dubai. It requires the audit of registered real estate projects to be conducted in accordance with the applicable laws and to ensure the same it has approved 20+ auditors in the UAE who are eligible to carry out real estate audits.
We are one of the best auditors in UAE that have been authorized by RERA to conduct real estate audits in Dubai. We at Nadeem & Umendra Chartered Accountants have highly qualified and experienced audit professionals that are well versed with all the applicable laws and regulations and can help real estate developers, Owners’ Associations or Jointly Owned Property Managers, and the trustees by performing high quality RERA audits.
Audit of Real Estate Developers
RERA requires all the real estate developers registered with it to have an ESCROW account and appoint a RERA approved auditor to carry out an independent audit and submit report on the completion status of the ongoing projects. The agency also requires registered developers to submit an annual audit report for all the completed projects. These requirements are part of the agency’s strategy to boost the adoption of good governance practices among developers in the real estate business sector.
In addition, RERA has made it compulsory for developers to submit a cash flow audit report every 6 months. Developers will have to pay fine to the agency in case the 6 months deadline is not met or cash flow audit report is not submitted to the agency.
These cash flow audits provide developers with an opportunity to attain confidence of customers as presenting reports resulting from these audits would give confidence to the buyers that developer has nothing to hide from anyone.
Audit of Owners Associations/Jointly Owned Properties and Master Communities
RERA considers each and every owner of a property in Dubai to be part of Owners Association/Jointly Owned Property (JOP). The Association/JOP requires owners to maintain the units of property they own by themselves. The law that governs this industry has recently been changed and the new law no. 6 of 2019 has replaced the previous law no. 27 of 2007 concerning the ownership of Jointly Owned Properties in the Emirate of Dubai.
Audit of Owners Association/JOP and master communities is an audit of service charges received from the members of associations and communities. The said charges include an Owners Association charge which is related to maintenance of assets that are commonly used by two or more units such as boilers, chillers, lifts, corridors, etc. In addition, a master community charge is also included in the above mentioned service charges for usage and maintenance of assets commonly used by the whole community, for example, tunnels, street lights, trash cans, etc.
Initially, the service charges are based on budgeted costs and in subsequent years these charges are based on previous year financial results. These facility management companies or teams provide maintenance and charge each owner a specific price based on a pre-defined rate per square foot approved by the Regulator.
We carry out stringent checks while performing audit of accounts of Owners Association/JOP to ensure the interests and the investments of the owners are secured and any irregularities are reported to the members. We not only examine and check expenses but we also audit receipts from the Association owners’/community members. We help the users of the financial statements in having a comprehensive look at the financial statements in addition to making them as transparent as possible.
Basic Laws and Regulations Applicable to Real Estate Business Sector
The basic laws and regulations applicable to developers in Dubai are as follows:
- RERA will have the right to monitor the activities of Owners Associations/JOP and real estate developers and audit their accounts.
- RERA requires developers and Owners Associations/JOP to present certified financial statements including budgeted revenues and cost of its projects for opening of the ESCROW account.
- The agency requires ESCROW agents to maintain record of revenues and expenses of all its ESCROW accounts. The agency can demand the ESCROW agents to provide any information at any time for it to be audited by an independent auditor if necessary.
- In case RERA decides to cancel any project, the agency will appoint an approved auditor to examine the financial position of the project, the total receipts deposited into the ESCROW account and verification of all expenses. This type of audit is called Handover Audit.
Types of RERA Audits
Real estate audits have been classified into three types which are as follows:
- Operational Audit
- Financial Audit
- Compliance Audit
An operational audit involves examination of the environment in which an entity performs its business activities to increase the efficiency and effectiveness of its operations.
A financial audit involves examination of the following:
- Total cash received from customers including the number of units sold and cancelled.
- Total funds received from financial institutions for ongoing projects.
- All payments made during course of ordinary business operations such as registration fee, cost of land, etc.
- Issuance of advances to employees or third parties either in cash or in the form of bond or other financial instruments.
- Retention money of 5% on total funds received.
A compliance audit involves review and verification of activities of developers to ensure that they are in compliance with the applicable real estate laws and regulations.
Why Nadeem & Umendra Chartered Accountants?
Our audit firm is recognized as a prominent real estate audit and consultancy firm in the UAE. We specialize in devising creative strategies, identifying complex real estate problems, and providing viable solutions to resolve the identified problems.
We have been approved by the Dubai Land Department and RERA to provide audit services to real estate developers and Owners Associations and communities.
Nadeem &Umendra Chartered Accountants is an expert in performing quality real estate audits as we have a team of highly experienced professionals having sound knowledge of the requirements pertaining to these audits. Our aim is to provide all our clients with an audit report that displays true picture of their business operations. We tend to achieve our objective by examining every aspect of our client’s operations, finance, and compliance of all the applicable laws and regulations. We also provide accounting services without any cost to our key and major clients and this is done to ensure our clients meet their targets.
We are committed towards providing you with services that will not only maximize efficiency and effectiveness of your operations but will also help you in identifying and resolving your issues to ensure long-term success. In addition, we have technical knowledge and insights to help your organization in attaining growth in such a competitive business sector.
Our services include the following:
- Service entity requirements
- Management accounting
- Trust account compliance
- Compliance with tax laws
- ESCROW account auditing
- Master community audit
- Service charges audit
- Internal audit
- Budget reviews for Associations
- Special Levy reviews
- Mollak services
- Unit balance verification
Should you require or need a RERA approved audit firm in Dubai then please give us a call today and our team will be at your services in no time.