Property Management Company Operations Standards Annual Audit Checklist
This property management company operations standards annual audit checklist evaluates third-party management company compliance with professional standards, legal requirements, and owner fiduciary obligations. Property management companies hold licenses, manage owner trust funds, and exercise significant discretion over owner assets — creating substantial legal and regulatory exposure when standards are not met. Annual audit ensures compliance with licensing requirements, trust accounting stand
- Industry: Property Management
- Frequency: Annually
- Estimated Time: 3-4 hours
- Role: Principal Broker / Compliance Officer / Regional Director
- Total Items: 28
- Compliance: State Real Estate Broker Licensing Laws, State Trust Account Regulations, IREM Certified Property Manager Standards, NAA Code of Ethics, State Property Management Practice Acts
Licensing and Insurance
Verify all licensing and insurance requirements are current.
- Principal broker license current with no disciplinary action on record?
- All property managers with licensing requirements current?
- Errors and omissions (E&O) insurance current with adequate limits (minimum $1M)?
- Commercial general liability insurance current for company operations?
- Employee dishonesty or fidelity bond current to protect owner trust funds?
- Business entity registration current with state?
Trust Account Management
Verify trust account compliance with state regulations.
- Security deposits held in separate trust account from operating funds?
- Owner rental proceeds held in separate trust account from company operating account?
- Trust accounts reconciled monthly with three-way reconciliation (bank, book, subsidiary ledgers)?
- No commingling of company funds with trust account funds?
- Annual trust account audit by independent CPA completed?
Management Agreement Compliance
Verify management agreements are properly maintained.
- Written management agreement with every owner and property?
- All management agreements reviewed within last 3 years and updated for law changes?
- All fees fully disclosed in management agreement with no undisclosed markups?
- Termination provisions in management agreements followed when owners terminate?
- Owner communications provided per agreement terms (monthly reports, annual statements)?
Owner Reporting and Communication
Verify owner reporting meets professional standards.
- Monthly owner statements distributed within 15 days of month end?
- Annual income and expense statements accurate for owner tax reporting?
- 1099s issued to owners and vendors by January 31?
- Owner portal available for real-time access to reports and documents?
- Owner complaints tracked and resolved with documented response?
Fiduciary Standards and Documentation
Verify fiduciary obligations and professional standards compliance.
- Written conflict of interest policy requiring disclosure of related-party transactions?
- Owner trust funds never used for company operating expenses or cash flow?
- Annual professional standards and ethics training for all licensed staff?
- Any licensing board complaints tracked and responded to timely?
- Annual operations standards audit filed with principal broker?
- Management company performance metrics tracked and reviewed with ownership quarterly?
- NAA, IREM, or state apartment association memberships current for professional development?
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Why Use This Property Management Company Operations Standards Annual Audit Checklist?
This property management company operations standards annual audit checklist helps property management teams maintain compliance and operational excellence. Designed for principal broker / compliance officer / regional director professionals, this checklist covers 28 critical inspection points across 5 sections. Recommended frequency: annually.
Ensures compliance with State Real Estate Broker Licensing Laws, State Trust Account Regulations, IREM Certified Property Manager Standards, NAA Code of Ethics, State Property Management Practice Acts, AICPA Trust Account Audit Standards. Regulatory-aligned for audit readiness and inspection documentation.
Frequently Asked Questions
What does the Property Management Company Operations Standards Annual Audit Checklist cover?
This checklist covers 28 inspection items across 5 sections: Licensing and Insurance, Trust Account Management, Management Agreement Compliance, Owner Reporting and Communication, Fiduciary Standards and Documentation. It is designed for property management operations and compliance.
How often should this checklist be completed?
This checklist should be completed annually. Each completion takes approximately 3-4 hours.
Who should use this Property Management Company Operations Standards Annual Audit Checklist?
This checklist is designed for Principal Broker / Compliance Officer / Regional Director professionals in the property management industry. It can be used for self-assessments, team audits, and regulatory compliance documentation.
Can I download this checklist as a PDF?
Yes, this checklist is available as a free PDF download. You can also use it digitally in the POPProbe mobile app for real-time data capture, photo documentation, and automatic reporting.