RERA Compliance

Our documented trust account audit procedures enable us to deal with complex situations such as transfer of funds from one escrow account to another; or long-term projects, where cash is collected prior to opening of escrow account.

Over the years, our team has developed a thorough understanding of various laws prescribed by RERA, thereby enabling us to prepare accurate audit reports, complying with RERA regulations.

In addition to project trust account audits, our team carries out the preparation of project cash flow statement in R/T/02 required for opening of Escrow Account.

Service Charge Modelling for RERA, Dubai

Service charges in Dubai are applicable to all types of properties in the city. It is a recurring fee that is paid by owners or landlords, for the maintenance of communal areas. Various aspects that include maintenance, cleaning, security staff and landscaping are covered in the service charge. The method of applying service charges are governed by guidelines from RERA, Dubai’s Real Estate Regulatory Authority.

Service charges may not be the same for every owner; it varies depending on factors that include the size of the unit, the permitted use of the unit and certain standards that must be maintained by particular unit owners.

For developers, a good service charge model ensures that the charges are levied on an accurate and systematic basis, and in compliance with RERA requirements

Kick-off Meeting

• • • Understanding the project​
    • Understanding data sources, gaps, and data validation requirements
    • Analyzing the mix of units​
    • Study of adjacencies – related developments or other projects which share overall costs​
    • Discussion of timelines
    • Finalizing responsibilities from the sides of client and consultant

Market Research & Data Analysis​

• • • Obtaining cost data from the client​
    • Discussions regarding the cost data​
    • Verification of supporting documents and quotations provided by the client​
    • Completion of research for missing data​
    • Validation of any assumptions and data sources with the client​
    • Finalization of the basis of allocation for each cost​

Market Benchmarking​

• • • Identifying similar developments in terms of​Profile of the property​, Size of the property​ & Location.​
    • Mix of usage​
    • Obtaining service charge information for the comparable properties​

​Resource-Based Cost Allocation​

• • • Tabulating all costs and internally finalizing the basis of allocation for each of the costs​
    • Identification of costs directly attributable based on the component (i.e., Residential / Retail / Commercial)​
    • Definition of criteria to develop a Weighted Criteria Assessment Matrix to ensure a fair and reasonable apportionment of common area costs and other services​
    • Finalizing Weighted Criteria Assessment Matrix ​
    • Applying the basis of allocation to each cost element ​
    • Allocation of costs within each component​
    • Preparing the financial model in Excel including all the cost elements​

Discussion & Finalization

• • • Presenting the financial model in Excel including all the cost elements to the client, with the final service charge that has been arrived​.
    • Discussions on the criteria- weight ages, key assumptions, data estimations, etc.​
    • Comparison of service charge with comparable properties​
    • Finalization of the service charge model​

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 units 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,
    • 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 of bonds and other financial instruments.
    • Retention 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 regulations defined by the Real Estate Regulatory Agency (RERA).

• • • 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 ESCROW agent must provide regular details of revenues and expenditures of his ESCROW accounts. The department can demand from its ESCROW 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 cancels 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.

GSPU Auditing 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, analysing and make strategies for complex problems in real estate and provide perfect solutions. Our Services includes:

• Critically analyse 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, finance, health and identify the risky areas and provide solutions to overcome the risk factors.