Property Accounting For Managed Properties
When managing properties for owners, it is important to understand the needs of the client’s accounting requirements.
Accounting for owners can be either on a cash or accrual basis—the simplest requirements being a balance sheet, income statement, general ledger and statement of changes in cash. Understanding basic accounting is a minimum requirement to meet the needs of this class of owners.
Providing accounting services for a hospital becomes more complex and requires an understanding of how certain expenses, including lease expense, affects their balance sheet and/or income statement. Providing the correct format is also important so that the integration of property information is consolidated into the parent company’s financials.
Accounting for public companies is more complex and requires an understanding of how expenses, including capital expenses, affect funds from operations (FFO) and involves more scrutiny. Public companies follow certain accounting standards and SEC requirements. It is important to follow their guidelines and policies to prevent errors in their required security filings.
When selecting a management firm to perform accounting functions, an owner must be diligent and ask questions to assure the firm is capable of understanding their accounting needs.