Assurance Services Case Studies

Institutional real estate investors regularly call on AGH to perform due diligence prior to making an investment. AGH has performed due diligence procedures on projects ranging from $25 million to $250 million. Recently, a client about to close on the purchase of a $100 million shopping center project received substantial benefits far outweighing the cost of our services. During the 30-day window for due diligence, when we compared seller records to lease agreements, we discovered that the seller had inadvertently overstated the project's rental income in their cash flow model. As a result of this discovery, our client was able to negotiate a lower purchase price.

An institutional real estate investor asked AGH to conduct a post construction examination for a $75 million real estate project in which they were an equity partner. The study focused on recovering excess construction costs from the client's former partner in charge of property development. We helped the client narrow their list of items needing to be reviewed and met with the property developer to begin testing. Ultimately, we identified accounting errors associated with how the developer allocated costs between multiple projects, which enabled our client to recover substantial dollars that would otherwise have been lost.

Keeping track of revenue isn't always easy in the fast-paced construction business. As buildings are constructed over time and projects change frequently, it can be difficult to calculate a project’s percentage completed at the end of a period and the actual profit from the job. AGH discovered that one of our construction clients was calculating its year-end revenue by adjusting projects' actual costs for customer change orders but not adjusting the revenue on their job schedules. As a result, profits seemed lower than they actually were, and the job schedules used to manage each project did not match the company financial statements. We helped the company devise a better way to track revenues and calculate profits, and with more accurate information, this company now is armed to make better decisions.