Dubai: Bringing in audit committees has “tightened” up the way service charges collected from property owners in Dubai are utilised. So far, there are 27 audit committees that report to Real Estate Regulatory Agency on how service charges are collected and deployed.
“This reflects our keenness to strengthen the principle of governance and control by using audit firms to audit JOPs (jointly owned properties),” said Marwan Bin Ghalita, who heads RERA. “We are working with our various partners to develop standards and controls that govern audit mechanisms, reach annual budgets with the highest levels of integrity and credibility — especially when it comes to service allowances — and develop financial reports related to the management of a property.”
The audit committees were set up as part of Dubai’s revised laws on the management of freehold properties, which came into effect in 2019. Each freehold building and community in Dubai will have its service charges set and overseen by these third-parties.
Look into every detail
The intention was to lower the control developers or their representatives had in the management of properties post-handover. These are the primary roles of these auditors:
• They are required to audit financial statements of JOPs to affirm whether these are free from material misstatement. Auditors can comment on whether the data was prepared in accordance with the International Financial Reporting Standards (IFRS) as well as provide a report on the financial statements and the necessary communication under international auditing standards (ISAs).
• The firms will also evaluate the control standards and the risk management process for JOPs, as well as assess the effectiveness of operations, and the adequacy and reliability of the financial information for properties.
• They firms can ensure that a property management company complies with the applicable laws and regulations regarding JOPs.
“The signing of such agreements with prominent companies comes within the framework of RERA’s keenness to provide the best auditing services to our customers," said Mohammed Khalifa bin Hammad, Senior Director of the Real Estate Relations Regulatory Department at RERA.
* The report would also include the risk management process for these projects, assessment of the effectiveness of operation, and the reliability of the financial information of JOPs. It also includes the results on the assessment of compliance with the laws and regulations enforced regarding JOPs.