The market for real estate businesses in the United Arab Emirates is constantly shifting, and the arrival of risks associated with property management, fraud can threaten a company’s financial performance. Disjointed activities, weak internal controls, insufficient process design implementation, reporting mistakes, and uneven financial reporting are among the issues that real estate organizations face.

1. Internal Audit of Real
Estate Company in
UAE
www.hlbhamt.com

2. The market for real estate businesses in the United Arab Emirates is constantly shifting,
and the arrival of risks associated with property management, fraud can threaten a
company’s financial performance. Disjointed activities, weak internal controls, insufficient
process design implementation, reporting mistakes, and uneven financial reporting are
among the issues that real estate organizations face.
To handle the numerous requirements and financial risks that come with distinct
industries, new ways must be devised. HLB HAMT has a professional internal audit and
risk advisory team providing real estate industry services to assist in managing risk and
improving operational performance without restricting development opportunities.

3. Key risks in Real Estate Industry
General Internal Controls
Internal control risks have an effect on the overall performance and efficiency
of internal controls, and consequently on the company’s ability to fulfil its
goals. Certain risks that need to be addressed are the absence of properly
specified qualification standards with flaws in the division of responsibilities;
insufficient standard operating procedures in different departments also
make a big impact. A risk analysis that is sufficiently thorough and
completed on a regular basis should influence internal control systems.

4. Financial Reporting & Cash Management
Improper tracking of cash management and control practices, absence of
evaluation of daily purchases/validation of vendor comparative prices,
slowdowns or factual errors in bank reconciliation statements, delays in
books of accounts finalization, and insufficiency of backup documentation
and many more are all finance-related issues that need to be addressed in
the retail sector.

5. Inventory
Inventory control is vital in the real estate industry for maintaining accurate
records and preventing fraudulent activities. Inventory management
systems help to eliminate risks such as the failure to record inventory ageing,
poor management processes, delays in completing frequent inventory
counts and material receiving storage, failure of supervisory control, and
finally, loose procedures in material transfer.

6. Investments
The United Arab Emirates’ real estate industry offers several opportunities for
both existing companies and new entities. Dubai’s real estate market is on
the rise, and investors should be wary of certain risk elements such as lack of
adequate feasibility studies, investments currently regulated, insufficient
purchase, liquidation, and exit plans.

7. Fixed Assets
The risk component of fixed assets is compounded by the lack of fixed asset
registries, control procedures for the addition of assets, insufficient asset
movement regulations, and gaps in asset warranty tracking. Any business
must keep a record of fixed assets throughout their existence. A company
with a high number of fixed assets must identify, monitor, record, and
reconcile its assets, which is critical for asset management.

8. Leasing
Leasing a property is a serious financial choice, so proceed with caution. To
guarantee you have the most updated information relevant to your locality
and situation, we recommend seeking assistance from knowledgeable
financial and property specialists. In Dubai’s property market, there are
several success stories. However, there are some risks that you should be
conscious of like disparities in property registration, brokerage contracts,
leasing rental and security deposit collections, bad tenant practices with lax
rules, insufficient leasing and subleasing processes for new leases, renewal
and termination of current leases, and rental concessions.

9. Facilities & Property Management
Managing own properties or third-party properties is increasingly becoming
an important activity for many real estate developers. Property management
offers an opportunity to maximize profits at relatively lowering expenditures,
and minimal investments. Property management however is hampered by a
number of key issues, including ineffective tracking and management of
tenant complaints and relationship strategies. Similarly, the facilities
management function should not suffer from a lack of responsive ticket
management, asset coverage under PPM schedules, disparities in building
inspection and reporting, and HSE compliance violations.

10. Construction
Real estate construction projects are fundamental to a country’s economic
development. The construction industry, on the other hand, is experiencing
significant capital losses as a result of a variety of constraints and stereotypes,
including insufficient checking of project execution, deliveries, variation
orders, and non-compliance reports, disparities in payment certification to
developers, project insurance, project closure, handover, and commissioning,
and an absence of adequate site inspections.

11. Sales & Marketing
In recent years, the real estate industry has evolved. From media platforms to
digital marketing, the opportunity to reach target markets has significantly
increased, as have the risks associated with it, such as poor tracking of
inbound leads, gaps in sales contract forms and weak sales reporting.
Similarly, it is important to ensure a tight monitoring of marketing budgets,
and a strong system to review and respond to social media feedback along
with digital marketing campaigns.

12. HR/Payroll
Managing HR/payroll activities in any company is a difficult process that
necessitates a significant commitment of time and money. Companies can
get into difficulties if they are not managed by qualified experts because of
hazards including poor controls in employee management, gaps in
recruiting processes and procedures for promotions and salary calculation
with inappropriate practices for employee entitlements.

13. IT systems
The real estate business has seen substantial transition over the last decade,
and it continues to adapt with the newest innovations in Information
technology. Technology will be the foundation that attracts new players to
the sector, but it will also expose them to risks like insufficiency of IT systems
with shortfalls in workflows with no data protection controls and use of
manual interfaces between multiple systems used (such as) Property
Management software, Finance and Accounting systems and HR & Payroll
systems

14. Procurement and Contracts
Strategic procurement is an important aspect of the real estate sector for any
organization that wants to stay profitable. A well-developed procurement
process immediately translates into enhanced company performance by
focusing on eliminating risks such as a lack of control over price comparisons
and purchase lead times, loopholes in purchase order processing, vendor
selection, periodic monitoring, and agreements with third parties.
Management of contracts including contractor identification, selection,
performance evaluation as well as payment certification are crucial aspects
that need to be well monitored.

15. Real Estate Internal Audit in UAE
Real Estate is one of the most significant industries in the UAE, and its attraction to
investors has made it a market catalyst. The sheer complexity of development and
construction services, coupled with the high funding costs, shortage of skilled
resources, and high competitiveness with suppliers around the world, keeps
exposing investors to a variety of risks that must be handled constructively to
maximize the value of the company.
Our qualified auditors at HLB HAMT provide internal audits for real estate
company and ensure that all departments within the organization work together
efficiently and productively.

16. Contact Us
HLB HAMT
Level 18, City Tower-2,
Sheikh Zayed Road
PO Box 32665
Dubai – United Arab Emirates.
Tel: +971 4 327 7775
E-mail: dubai@hlbhamt.com
www.hlbhamt.com