The Importance of Creating a Strong Audit Trail
Over the last 2 years, we have conducted a significant number of audits. The audits are not finance related, the focus is on compliance on 2 levels - Compliance of the letting agency and compliance related to process and systems. Our desktop audits are conducted to ensure that GLM members are complying with membership criteria and relevant statutory requirements.
We have been asked by clients to audit their property portfolio to ensure compliance, to prepare for the sale of their business or to invest in other agencies; most recently we have been involved in auditing agencies being acquired.
The Importance of The Audit Trail
The role of the letting agent is not as simple as it seems. Adhering to robust terms and conditions of business sets out the framework within which an agent is required to work, however, the attention is in the detail and part of that detail revolves around process driven systems. It is the audit trail starts when terms are signed by the landlord and the lettings process begins and goes right the way through to post tenancy when the tenant gives up vacant possession of the property and the check out is executed. So many steps need to be adhered to always ensuring that the all one’s ducks are in a row.
It is the responsibility of everyone involved in the lettings process to ensure that information entered on to the CRM is up to date so issues can be easily identified and kept track of.
Making sure that time-sensitive processes are adhered to is a key part of a strong audit trail :-
Adhering to deadline agreement dates
Protecting security deposits within the 30 day window
Issuing prescribed information related to tenants’ deposits within the 30 day time-frame
Ensuring that all safety certificates are renewed by the due date
Serving notice and adhering to statutory time-frames
Consequences of a Poor Audit Trail
Poor record keeping, poor systems, poor processes will negatively impact not only the value of a letting agency, but also the relationship with landlords and tenants and potentially, drive up complaints.
Audit trails that are not correctly monitored will have a detrimental impact on so many different areas of the business - from health and safety to administrative tasks, and as opposed to minimising risk and protecting the agency, the clients’ portfolio and the tenants, poor audit trails can also endanger tenant safety, lead to claims for negligence and cause reputational damage. Key events will be missed, maintenance will not be time stamped, errors will occur and valuable evidence, should it be required, will be missed.
It’s important for businesses to maintain a comprehensive and detailed audit trail so they can track back any irregularities and find gaps in systems if and when they happen. Letting agents as a result of their duty to landlords, must adhere to regulatory requirements which require compliance and some kind of audit or assessment. High-quality electronic records or even hard copy filing systems, form strong audit trails to meet and support the compliance mandates.
Often IT solutions are used to maintain the electronic records needed to manage record keeping are key to compliance, and an audit trail functions as a way to meet those standards.