Real Estate Developers are required to get their project escrow accounts audited annually for each project under development. GSPU, a Top Bahrain RERA consultant has experience in Project Trust account audits, and legal compliances, in line with guidelines prescribed by RERA, which goes a long way and can be the Best RERA consultant in Bahrain.With our experience in dealing with major property developers in Bahrain, a cordial relationship with the RERA Trust Account department as well as the Account Trustees, we are in a position to act as a Top RERA consultant in Bahrain to developers to comply with RERA regulations and be their Best RERA Auditors in Bahrain.
We have a team dedicated to Project trust account audits, available year-round to provide advice to developers on compliances required by RERA. Our relationship with RERA permits us to obtain prompt clarification on any unforeseen complications or amendments to the RERA guidelines.
Our documented trust account audit procedures enable us to deal with complex situations such as the transfer of funds from one escrow account to another; or long-term projects, where cash is collected before the opening of the 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 statements in R/T/02 required for opening of Escrow Account.
Service Fee Modeling for Bahrain's RERA
All kinds of properties in Bahrain are subject to service fees. Owners or landlords must pay this recurrent fee for the upkeep of common places.
The service price covers a range of services, including maintenance, cleaning, security staff and landscaping. RERA, Bahrain's Real Estate Regulatory Authority, has issued standards that govern how service fees should be applied.
Service rates may vary depending on criteria such as the size of the unit, the legal usage of the unit, and certain standards that must be met by specific 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
- 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 the client and consultant
- Obtaining cost data from the client
- Discussions regarding the cost of 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
- Identifying similar developments in terms ofProfile of the property, Size of the property & Location.
- Mix of usage
- Obtaining service charge information for the comparable properties
- 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
- Presenting the financial model in Excel including all the cost elements to the client, with the final service charge that has arrived.
- Discussions on the criteria- weight ages, key assumptions, data estimations, etc.
- Comparison of service charges with comparable properties
- Finalization of the service charge model
RERA (Real Estate Regulatory Agency), a government agency in charge of developing rules and regulations for various real estate activities, requires that all developers registered with RERA have an ESCROW account and undertake an independent audit to determine the project's completion status in terms of building progress. Following RERA, all completed projects from registered developers must submit an audit report annually.
There are three phases to the RERA audit.
- Operational Audit:The evaluation of the control environment in which a company conducts its business to improve its efficiency and effectiveness.
- Financial Audit:Financial auditing entails looking into:
- The total number of units sold, the total amount of money collected from customers, and the number of units cancelled.
- The total sum lent for the project by financial institutions.
- Every payment, including the cost of land, and registration fee.
- Every other payment, such as 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.
- A 5% percentage of all monies collected should be set aside for retention.
- Compliance Audit:To examine and confirm that the developer's actions are under the Real Estate Regulatory Agency's laws and regulations (RERA).
The basic laws relating developers to 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 article 6 of the rules, certified financial statements containing budgeted costs and revenues of the project should be presented for the opening of the escrow account.
- An ESCROW agent must provide regular details of revenues and expenditures of his ESCROW accounts. The department can demand 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 Bahrain & Land Department, our members are well known for their skills and expertise in identifying, analysing and making strategies for complex problems in real estate and providing perfect solutions. Our Services include:
- Critically analyze and identify the project’s completion 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.
- Performing 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, and health and identify the risky areas and provide solutions to overcome the risk factors.