It provides all the parties involved with comfort in knowing that the assimilation and reporting of vital financial information has gotten off to a proper start. With continued oversight and quality reporting, the ability to identify problems and errors on a timely basis remains intact. This knowledge can then be used to determine if any modifications to the real estate project's accounting and reporting procedures needs to be made.

(Is this the costliest mistake commercial real estate landlords make?)

Audited financial statements may be required by lenders or other sources of funding. These audited financial statements show credibility on behalf of the joint venture and allow funding sources to gain some comfort as to how there funds have been used. Audited financial statements used in conjunction with waterfall or other distribution criteria will eliminate the need for any claw-backs for reporting and distribution errors, which can be extremely embarrassing and cause a vital loss of credibility.

GlobeSt.com: What types of information would an audit uncover that you might not otherwise be able to capture?

Klein: An audit provides an overall snapshot of the joint ventures' finances. A good audit examines the controls the venture has in place and the quality of the financial reporting. Among the critical items an audit captures include the venture's cash flows, debt and equity structures; how its budgets are tracking; and transfer pricing or other tax planning opportunities for projects with global investors and financing sources.

An audit not only reports on the financial statements, but also reports to those with governance or oversight any material weaknesses in internal control and areas where there may have been accounting disagreements. Through audits those with oversight are given the ability to evaluate how management treats errors in financial reporting and with the right advisors in place, identifies tax and financial planning opportunities.

(Some say this is the biggest mistake developers make when drafting covenants, conditions and restrictions (“CC&Rs”). Do you agree?)

MIAMI—With South Florida's building boom slowing down, developers are speeding up to bring projects to market. However, in the process many joint-ventures can skip critical financial steps that result in little room for error when it comes to the bottom line.

GlobeSt.com caught up with Steve Klein, a partner at Miami-based accounting firm Gerson Preston, to get his insights on why developers involved in a joint-venture should conduct regular audits. His answers could save you big bucks.

GlobeSt.com: How do developers benefit from auditing a joint venture from inception of the project to its conclusion?

Klein: First and foremost, an audit serves as a critical evaluation of the recorded financials in the joint venture is being done. Conducting regular audits eliminates surprises to the developers, their lender and the venture's investors.

It provides all the parties involved with comfort in knowing that the assimilation and reporting of vital financial information has gotten off to a proper start. With continued oversight and quality reporting, the ability to identify problems and errors on a timely basis remains intact. This knowledge can then be used to determine if any modifications to the real estate project's accounting and reporting procedures needs to be made.

(Is this the costliest mistake commercial real estate landlords make?)

Audited financial statements may be required by lenders or other sources of funding. These audited financial statements show credibility on behalf of the joint venture and allow funding sources to gain some comfort as to how there funds have been used. Audited financial statements used in conjunction with waterfall or other distribution criteria will eliminate the need for any claw-backs for reporting and distribution errors, which can be extremely embarrassing and cause a vital loss of credibility.

GlobeSt.com: What types of information would an audit uncover that you might not otherwise be able to capture?

Klein: An audit provides an overall snapshot of the joint ventures' finances. A good audit examines the controls the venture has in place and the quality of the financial reporting. Among the critical items an audit captures include the venture's cash flows, debt and equity structures; how its budgets are tracking; and transfer pricing or other tax planning opportunities for projects with global investors and financing sources.

An audit not only reports on the financial statements, but also reports to those with governance or oversight any material weaknesses in internal control and areas where there may have been accounting disagreements. Through audits those with oversight are given the ability to evaluate how management treats errors in financial reporting and with the right advisors in place, identifies tax and financial planning opportunities.

(Some say this is the biggest mistake developers make when drafting covenants, conditions and restrictions (“CC&Rs”). Do you agree?)