Discover how smarter, risk-based audit requests turn document fatigue into meaningful assurance for real estate teams.
Imagine this: A real estate owner sits down with their finance team to review the annual audit request list. It is 40 pages long!
After scanning through requests for lease agreements, debt schedules, appraisals, and joint venture documents, they pause and ask, “Are we being over-audited?”
It’s a question we sometimes hear, and it’s understandable. Real estate entities are layered and nuanced, and the volume of documentation can feel overwhelming. For auditors, the request list is a roadmap to risk mitigation. For clients, it can induce document fatigue.
This dynamic creates a professional paradox: the need to ask for more to adequately audit can lead to the perception we’re asking for too much.
Why the audit request list isn’t random
Every item on an audit request list is tied to risk mitigation. These requests are not arbitrary. They are often mapped to professional standards and tailored to the material risks inherent in real estate:
Entity complexity
Ownership structures often include joint ventures and complex debt arrangements. Documentation will help us confirm completeness and accuracy across entities and transactions.
Valuation complexity
Real estate assets are illiquid and subject to fair value judgments. We may request appraisals, environmental reports, and discounted cash flow models to corroborate management’s estimates.
Revenue recognition
Lease accounting under ASC 842 remains highly technical. We will need lease contracts, tenant improvement allowances, and commencement schedules to test that revenue is recognized appropriately. Each request is a targeted point of evidence, designed to confirm that financial statements are fairly presented and free of material misstatement.
The catch-22 of diligence
Beyond mitigating financial statement risk, a comprehensive request list serves another purpose: reinforcing internal discipline and control efficacy. When everything is in scope, finance teams are encouraged to maintain thorough records, reconcile accounts regularly, and uphold internal controls year-round. This rigor improves the overall internal control environment.
But it can be a delicate balance. While professional skepticism and detailed documentation are essential, the perception of inefficiency has the potential to strain client relationships.
Shifting the conversation: From volume to value
For real estate clients, a focus on value rather than volume reframes the audit process — emphasizing meaningful assurance over excessive documentation and driving efficiency through collaboration.
Continuous engagement throughout the year replaces the traditional one-time document submission. Addressing areas such as debt compliance or acquisitions outside of fieldwork reduces time pressure and improves responsiveness.
As controls are validated, audit scopes can be refined to reflect lower-risk areas, enabling more targeted procedures and limiting unnecessary requests. Each document request should be purposeful, tied to material risks and stakeholder relevance. This approach strengthens the quality of assurance while reducing burden.
How CLA can help with annual audits
CLA’s real estate assurance professionals bring deep industry knowledge and a collaborative mindset to every engagement.
We help clients streamline audits through year-round communication and tailored scoping, reduce document fatigue by focusing on material risks and effective controls, and improve transparency by clearly explaining the rationale behind each request.