Getting complex real estate transactions right matters.
This case study highlights how Michael Mastruzzo, Real Estate Advisory Partner at SAX, and our advisory team worked alongside a REIT to help guide them through the recording of dispositions within their portfolio accurately from settlement statement to general ledger journal entry.
Read the case study to learn how SAX approaches complexity with confidence.
Challenge
A Real Estate Investment Trust (REIT) that invests in hotels sold two properties during the year. Although the Company has a structured accounting department to perform daily, monthly, and annual accounting functions, it required additional expertise to ensure the disposition entries were accurately reflected in the financial records.
Action
The Company engaged SAX to compile an analysis aligning the journal entries recorded in connection with the transactions to the structure of the settlement statements at closing. SAX was also asked to examine the proper recording of the gain or loss related to the two sales transactions.
Resolution
SAX identified team members within its advisory practice who approached the project collaboratively with management. The team built a schedule that included components of each settlement statement, aligned each line item with the appropriate general ledger account, and compared these entries to those recorded by management. Some differences were identified and discussed with management, who ultimately determined the reconciling items.
Results
SAX’s approach—combining relevant technical expertise with close collaboration—helped the Company record the transactions accurately and efficiently in its general ledger, enabling auditors to evaluate them early in their process. For significant transactions such as these, SAX takes due care to evaluate the underlying substance and examine relevant supporting evidence to ensure complex transactions are properly reflected in a company’s financial statements.
“Sax” is the brand name under which Sax LLP and Sax Advisory Group LLC and its subsidiary entities provide professional services. Sax LLP and Sax Advisory Group LLC (and its subsidiary entities) practice as an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations and professional standards. Sax LLP is a licensed independent CPA firm that provides attest services to its clients, and Sax Advisory Group LLC and its subsidiary entities provide tax and business consulting services to their clients. Sax Advisory Group LLC and its subsidiary entities are not licensed CPA firms.