RERA Audit Requirements for Real Estate Companies

Real Estate Developers: All registered developers with off-plan projects must have annual RERA audits. This includes master developers, sub-developers, and any entity selling property before completion.

Property Management Companies: Companies registered with RERA to provide property management services require annual audits, particularly for service charge fund management.

Owners Associations: Homeowners associations managing common areas and service charges must have their service charge accounts audited annually.

Real Estate Brokers: Some broker categories require financial audits depending on license type and transaction volume.

Master Communities: Large-scale community developers with ongoing infrastructure obligations require comprehensive RERA audits.

Legal Requirement: Under RERA Law No. 8 of 2007, all payments from buyers of off-plan properties must be deposited into DLD-registered escrow accounts.

Escrow Account Setup: Must be opened with approved UAE banks, registered with Dubai Land Department, separate account for each project, named clearly identifying the project.

Fund Release Criteria: Funds can only be released upon achieving construction milestones certified by an approved engineer. Typical milestones: 25% foundation, 50% structural, 75% near completion, 100% handover.

Audit Requirements: Annual audit must verify all customer payments deposited, releases match approved milestones, proper reconciliation to project completion percentage, adequate documentation for all transactions.

Common Issues: Co-mingling of funds between projects, premature fund releases, incomplete documentation, incorrect allocation of shared costs.

What are Service Charges: Fees collected from unit owners to maintain common areas, facilities, landscaping, security, and other shared services.

Audit Requirement: Service charge funds must be audited annually and results disclosed to all unit owners within 3 months of year-end.

Key Audit Areas: Verify service charge income matches units and rates, confirm expenses used only for designated purposes, assess adequacy of maintenance reserves, review vendor contracts and payments, check transparency of reporting to owners.

Owners Association Requirements: Proper governance structure, annual general meetings, transparent budgeting, segregated bank accounts, detailed expense tracking.

Common Findings: Expenses not related to common areas, lack of supporting documentation, inadequate reserves for major repairs, insufficient owner communication, co-mingling with developer funds.

Filing Deadline: RERA audits must typically be submitted within 90-120 days of financial year-end. Specific deadlines vary by entity type.

Required Documents: Audited financial statements, independent auditor report, escrow account certification, service charge fund report, developer project status report.

Electronic Submission: Most submissions made through DLD/RERA online portals. Proper formatting and file types required.

Language Requirements: Financial statements must be in Arabic or English (Arabic preferred for DLD submissions).

Penalties for Non-Compliance: Late submission fines, suspension of escrow account access, inability to register new projects, potential license suspension.

IFRS 15 Application: Real estate revenue recognition follows IFRS 15 (Revenue from Contracts with Customers).

Transfer of Control: Revenue typically recognized upon handover of completed units (not during construction), unless control transfers over time.

Off-Plan Sales: Payments received before handover are contract liabilities (customer deposits), not revenue.

Percentage of Completion: Rarely applicable for UAE residential real estate unless specific criteria met.

Rental Income: Investment properties generate rental income recognized on straight-line basis over lease term.

Service Charge Income: Recognized when services provided (monthly/quarterly basis).

Escrow Violations: Funds released without proper milestone certification, co-mingling of project funds, inadequate documentation of releases.

Service Charge Issues: Expenses not properly allocated to common areas, personal/administrative costs charged to service charge, inadequate reserves.

Revenue Recognition Errors: Premature revenue recognition on incomplete units, incorrect treatment of cancellations and refunds.

Related Party Transactions: Facility management fees to related entities not at arm's length, construction contracts with affiliated companies without proper documentation.

Documentation Gaps: Missing approvals for significant transactions, incomplete board minutes, lack of homeowner communication records.

Financial Records: Complete trial balance, general ledger, bank statements and reconciliations, aged receivables (buyer balances).

Escrow Documentation: Escrow account statements, milestone certificates, fund release approvals, DLD escrow registration documents.

Service Charge Records: Service charge budget, collection schedule, expense invoices and payments, vendor contracts, reserve fund analysis.

Project Documentation: Construction contracts, project timeline, handover certificates, buyer sale agreements.

Corporate Records: RERA registration certificate, trade license, board minutes and resolutions, ownership structure.