Depending on where you live, you may be subject to a routine audit or a random one. If you are familiar with the property management industry, you know that there are several moving parts in the industry. Thus, for many property managers/landlords, the word audit can be quite anxiety-inducing. However, with these tips to be audit-ready, you can enjoy the year-round peace of mind knowing that all documents are in order.
Set Some Time every day for Data Entry and Review
As we mentioned earlier, there are various moving parts in the property management industry. You will likely have something or the other you should document or review at the end of every day. Even if it's something as minor as entering rent received, do it the very same day as stalling the task only adds to the pile of work you will have for the next day, increasing the chances of you missing something or the other.
You can also use property management software to make your life easier. It allows you to document incoming and outgoing checks, transactions, and invoice numbers. You can also use the bulk deposit and mirror tool to eliminate repetitive tasks ensuring smoother and more efficient documentation.
Set Reminders for Yourself
Detailed reminders help ensure you do not miss out on any critical information. If you need to update any licenses or other documentation, set a comprehensive reminder for yourself. You can even record phone conversations and make a checklist of tasks for the next day so that you stay on top of the documentation requirements.
Be Transparent in Your Ledgers
Transparency is the key to building a trusted relationship between the investor and the manager, as the former deserves to know exactly where they spent and earned money from. To maintain transparency, you should hold on to the receipts, if not physically, then try to keep a picture of each. You can, of course, discard them or archive the folders after the audit.
Get Help if You Need It
We understand ledger maintenance is a time and labor-intensive job that landlords/managers often find themselves struggling to handle. But if you want the audit to go smoothly, you have to maintain a detailed record of all transactions in the ledgers. If you find yourself unable to cope with the amount of work, don't be afraid to ask for help. If you are a landlord, hire a property manager. If you are a property manager, you can hire an assistant or a bookkeeper, or even a college student to help you with record maintenance.
Conduct a Monthly In-House Audit
Allocate the end of the month as the time you make sure your accounts reconcile, and your documents are updated, and so are your licenses. You can create an audit-checklist to ensure you are ready for a surprise and random audit anytime of the year.
Why Should You Be Audit-Ready?
An audit can be very anxiety and stress-inducing process. The only way to make it more comfortable and efficient is by ensuring you are prepared for it well in advance. If you live in a state where you can be subject to a random audit, these tips to be audit-ready can very well be a lifesaver. They make the audit process faster, easier, ensure bookkeeping accuracy and reduce legal and financial risks. But most importantly, they guarantee peace of mind for the landlord and the manager.