Policies and Procedures for Property Management

By Elizabeth K. Lewis, CPA, Business Assurance & Advisory Services Senior Manager

Policies and Procedures for Property Management

Does your property management company have the proper internal controls in place?

Internal controls, such as segregation of duties, are crucial for all industries. For property owners, it is also imperative to understand the policies and procedures of your property management company. The management team is an extension of your business; ensure they maintain accountability and transparency to support your business success.

The following items are a sample of key processes to check that your property manager has implemented:

Lease agreement controls:

    1. Maintain executed lease agreements outlining all terms and responsibilities.
    2. Enforce terms of lease agreements, including application of planned rent escalations and any adjustments to reimbursable income and shared operating expenses.
    3. Monitor cash receipts and maintain accurate reporting of over/under tenant ledgers.

Vendor management:

    1. Establish a controlled process to ensure only approved vendors are engaged.
    2. Understand spending thresholds that require secondary or owner approval and implement controls to ensure those requirements are met.
    3. Validate invoices against work performed.

Financial reporting:

    1. Perform monthly reconciliations of bank statements and tenant ledgers to timely identify and address any discrepancies.
    2. Ensure any manual journal entries have a secondary review and approval prior to posting.
    3. Provide timely reporting, including cash flow information and budget to actual comparisons to property owner.
    4. Document the year-end close process, including review and approval of all journal entries for cash to GAAP adjustment.


    1. Restrict user access to the general ledger.
    2. Utilize audit trails to track changes and user activities.
    3. Be wary of automated, recurring entries; ensure a proper review is performed.

When selecting a property manager, be sure to understand their internal controls and processes to safeguard your assets, prevent fraud, and support your decision making. Implementation of these items can greatly impact the integrity of your property’s reporting and performance.

Questions on this topic? Contact your Keiter Opportunity Advisor.

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About the Author

Elizabeth K. Lewis

Elizabeth K. Lewis, CPA, Business Assurance & Advisory Services Senior Manager

​Elizabeth is part of the Business Assurance & Advisory Services group at Keiter. Her client base consists primarily of private equity and real estate funds and also includes contractors and not-for-profits. Elizabeth specializes in auditing non-registered investment funds and possesses a comprehensive understanding of fund accounting and auditing services. She is also a member of the Firm’s Real Estate and Construction team.

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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.


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