Audit of Condominiums

The audit of condominiumsis aimed at providing all parties involved (condominium members, board members, administrators and manager) with more comfort about the management carried out by the condominium manager or administrator, as well as about the financial and/or accounting data that they present.

A strategy towards prevention, as it makes it possible to detect in advance factors that may contribute to errors or irregularities, andalso detection,as it permits the discovery of errors and irregularities that have already been committed(also known as punitive),condominium audit services have thus became a tool that has been increasingly used by condominiums.

One of the most significant factors for the increased provision of condominium audit services is the excellent financial benefit that may be gained in medium to long term with these audit works, mainly when they are carried out on a continuous and recurring basis.

There are also two increasing trends that have contributed to this growth:

• Several real estate development companies have already been including, in the agreement of new developments, the mandatory hiring of an independent audit firm to review the rendering of accounts, before it is effectively approved by the board and condominium members; and

• Several condominium administration companies have recommended or required the hiring of an external audit firm to review the rendering of accounts that they prepare.

Besides providing more assurance to all parties involved (condominium and board members, administrators and manager), the audit of condominiums is particularly interesting to managers, as they have many responsibilities, established by both the Civil Code (Law 10,406/2002)and the internal condominium agreements and rules, being also subject to criminal responsibility in case of irregularities or non-compliance with legal provisions.

The factors that determine the need of hiring audit services are as follows:

• Excess of extraordinary collections,without positive impact on the state of repair of the condominium;

• Manager or administration company that do not render accounts timely or clearly to condominium members, among others.

The errors and frauds that are commonly found in condominium audit works are as follows:

• Lack of recording/accountingof signed agreements or receipts from delinquent parties;

• Formalization of agreements with delinquent parties at discounts or under conditions different from those provided for in internal agreements or rules;

• Non compliance with the principles of the entity, in which managers or administrators mix the condominium finance with their personal ones, or of other condominiums (for example, the pool account);

• Invoicing an amount in excess of the purchase of goods and services, as well as the purchase of goods or services that are unnecessary;

• The non-payment of taxes, fees and contributions due or withheld by third parties;

• Deviation of condominium materials for private use;

• The non presentation of the original payment or receipt documents, as well as invoices or illegitimate receipts; and

• Purchasing goods or hiring suppliers without conducting a fair bidding process and with the participation of other companies, etc.

Main benefits provided by the audit of condominiums:

• Reduction in the regular collection amounts in medium and long terms;

• Decrease in the financial losses arising from errors or frauds in purchase and employment processes;

• Constant improvement in operational processes, controls and activities;

• Decrease in the time for approving accounts.

Responsible for providing condominium audit services, in both residential and office condominiums, UniQue counts on a team of qualified, experienced and highly trained professionals to provide valuable assistance, so that everybody is satisfied with assuranceabout the condominium accounts.

As a result of our condominium audit works, we provide a report that contains all the adopted procedures, detailing the identified risks and exceptions, as well as our suggestions on improvement and resolution of significant issues found.

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