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Effective Communication -- Defining an Accurate Budget
Effective Communications with Property Management Financial Statements
The 2016 property management operating budget serves as the foundation of expansion plans and the planning of new business services offered to tenants in the coming year. Property management budgets need to take into account budgeting and cost estimates in compliance with industry standards including GAAP to ensure their accuracy and reliability (Liapis, Christodoulopoulou, 2011). Of specific interest is how leases are represented in our pro forma financials by building for the coming year. Lease accounting is particularly complex, requiring an inordinate amount of detail on how they are amortized over time (Pounder, 2009).
To minimize the number of revisions to our company-wide budget, I would appreciate it if you would follow these guidelines in preparing each of your budgets. First, our budgets are created in Microsoft Excel using the property management template that has been in used throughout all divisions for all properties. The reason we're standardizing on this template is that corporate finance has automated the uploading process to create a consolidated series of financial statements. This is also essential to ensure compliance with GAAP standards (Liapis, Christodoulopoulou, 2011). The template file is called PropertyBudget2016Planning.xlsx and is in the shared folders. If you cannot reach the...
Please use the template to organize your properties' individual costs into quarterly estimates. As the template has four calendar quarters shown for 2016 which a column dedicated for each, please pro-rate your costs by each line item in the budget. The comments section at the far right of each line item is used for providing your series of assumptions for the quarterly growth of each expense. Please provide the growth rate of each line item in this comments section along with explanations of item. The following is an example from the template:
Revenue or Expense Category
Q1, 2016
Q2, 2016
Q3, 2016
Q4, 2016
Totals
Assumptions and Growth Rates
Leasing revenue -- Boynton Street
$200,000
$200,000
$200,000
$200,000
$800,000
All eases approved; no increase in rents
Second, you do not need to explain operating and administrative costs. If there is a planned increased in a given cost category, please provide insights into why you project there will be an increase. On all fixed costs (administrative, cleaning and contract services) please also provide the…
References:
Liapis, K.J., & Christodoulopoulou, E.P. (2011). How GAAP and accounting treatments influence property management. Journal of Property Investment & Finance, 29(3), 251-279.
Pounder, Bruce, C.M.A., C.F.M. (2009). New views on lease accounting. Strategic Finance, 90(11), 16-19.
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(the Company) to the Loan Agreement with Western Financial Services (the Lender). For the purpose of providing you with this letter, other than as set out herein, we have carried out the audit and review of the Company's financial information Report Based solely on the procedures set out in the engagement letter dated October 9, 20X5 (see Attachment 1) we confirm that the Company is in compliance with all of its
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