Legislative Framework – Reference of RERA Audit in Act and State Rules
Certificate by a Chartered Accountant is to be issued with set of objects and intentions with an intent to express the professional opinion or state the facts based on the information, explanation, documents received from the promoter.
Proviso to Sec 4(2)(l)(D) of RERD Act having reference and requirement of CA Certificate – which is reproduced below –
2nd Proviso – Provided further that the amounts from the separate account shall be withdrawn by the promoter after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project:
3rd Proviso – Provided also that the promoter shall get his accounts audited within six months after the end of every financial year by a chartered accountant in practice, and shall produce a statement of accounts duly certified and signed by such chartered accountant and it shall be verified during the audit that the amounts collected for a particular project have been utilised for the project and the withdrawal has been in compliance with the proportion to the percentage of completion of the project
Karnataka RERD Rule 4(2) (c) having reference and requirement of CA Certificate – which is reproduced below –
Status of the project (extent of development carried out till date and the extent of development pending) including the original time period disclosed to the allottee for completion of the project at the time of sale including the delay and the time period within which he undertakes to complete the pending project, which shall be commensurate with the extent of development already completed, and this information shall be certified by an engineer, an architect and a chartered accountant in practice
|Annual Audit under RERD Act||RERD Act – |
3rd proviso to sec 4(2)(l)(D)
|1. Amounts collected from Allottees for a particular project have been utilised for the same project and |
2. the withdrawal has been in compliance with the proportion to the % of completion of the project
CERTIFICATE FORMAT –
ON THE LETTER HEAD OF CHARTERED ACCOUNTANT
ANNUAL REPORT ON STATEMENT OF ACCOUNTS under RERD Act
(refer 3rd proviso to sec 4(2)(l)(D) of RERD Act)
NAME of the Project &
ADDRESS OF PROMOTER
SUBJECT: Report on Statement of Accounts on project fund utilization and withdrawal by [Project/ Promoter] for the period from DD/MM/YYYY to 31/03/2018 with respect to RERA Regn. Number PR/KN/YYMMDD/000XXX
1. This certificate is issued in accordance with the provisions of the Real Estate (Regulation and Development) Act, 2016 read along with the XXXX State Real Estate (Regulation and Development) Rules, 2017.
2. I/We have obtained all necessary information and explanation from the Promoter, during the course of our audit, which in my/our opinion are necessary for the purpose of this certificate.
3. I/We hereby confirm that I/We have examined the prescribed registers, Books of Accounts and documents and the relevant records of [Project / Promoter] for the period ended 31st March 2018 and hereby certify that:
i. M/s._______ (Promoter of the Project) have completed ________% of the project titled ________ (Name of the Project) RERA Regn.No.________ dated DD/MM/YYYY located at _________________________(full address)
ii. Amount collected from Allottees during the year ended 31/03/20XX for this project is Rs. ______________ and amounts collected from Allottees from inception of project to till date (i.e., 31/03/20XX) is Rs._______________
iii. Amount withdrawn during the year for this project from Project Bank Account is Rs. ______________ and total amount withdrawn from inception to till date from Project Bank Account is Rs. _______________
4. I/We certify that, I/we have considered the various professional certificates i.e., Chartered Accountant Certificates, Engineer Certificate, Architect Certificates issued from time to time for withdrawal of money based on % of completion of work.
5. I/We certify that the [Name of Project and Promoter] has utilized the amounts collected for____________ project only for this project and the withdrawal from the designated bank account(s) of the said project has been in accordance with the proportion to the percentage of completion of the project.
Observation and Qualification of CA –
- Promoter of the project has withdrawn in excess of eligible amount from Project Bank Account Rs._________
- Promoter of the project has not utilized (diverted) the monies drawn from Project Bank Account Rs._________
For XYZ & Co
Signature of Chartered Accountant / Designation
(ICAI Membership Number………….)
Firm Name and ICAI Reg No
- Different states may prescribe different format of certificate. Currently, the regulators in few states (MH, TN, AP, GJ, MP etc.,) have prescribed format.
- This certificate shall be issued by a CA holding COP
- CA to collect project financial information from the promoter.
- Collect estimated cost of project, escalation if any and details there on
- CA to collect and consider all professional certificates issued from time to time for withdrawal of project.
- This certificate shall be submitted to authorities and is a public document. It could be made available for viewing at the portal of the regulators in the respective states. The comments in this note are purely a matter of interpretation and not binding on any regulatory authorities. Therefore, there can be no assurance that the regulatory authorities will not take a position contrary to our comments or views.
Responsibility of the promoters –
- Promoter to maintain the complete financial and other information relating to project
- Provide such information to professionals to obtain RERA Audit Report on annual basis
- Submit this report to authority online or offline.
- Reconcile the receivables, received, utilized and balance money in bank account as on 31-03-2018
- Follow best practices / SOP’s
- The cost of the project as per RERA has to be reconciled as per books for Audit and compliance under other statutes like GST, Income Tax, ROC etc
- Maintain and update books of accounts from time to time
- Maintenance of data as per RERA project wise (rather company or project wise)
Take support of consultants and experts to understand the importance, implementation as per statute
Documentation and verification of records for issuance of RERA Audit Report by CA
- Accounting records – updated books of accounts
- Copy of application filed for registration of project under RERD Act
- Details of calculations considered to arrive at estimated cost of project.
- All project related documents like land documents, sanctions, clearances, NOC’s
- Amount incurred towards acquisition of land or TDR etc
- All bank statements of RERA project account and other bank accounts
- Statement of customers, list of agreement of sales entered, advances received, balance receivables etc
- Money collected from allottees, 70 % deposit made to RERA project bank account
- All government fees challahs for all clearances etc
- All development expenses bills, vouchers, invoices for both onsite and offsite expenditures
- Advance paid for supply of materials or services vouchers, references etc
- Variance to estimated project and reasons there on
- Certificates from Engineer, Architect and CA for withdrawal of money based on % of completion of construction
- Project Loan or other loan statements
- Interest calculation / attribution towards the RERA project.
- Indirect taxes / GST paid from time to time – reconciliation / assurance
- TDS made by buyers @ 1 % – reconciliation / assurance
Best Practices –
- The Promoter may have appointed external professionals to obtain certificates from time to time, consult the same professional who had issued the earlier certificate – handover those certificates to RERA Auditor
- All the RERA Audit report has to be in conformity with assurance standards issued by the ICAI.
- RERA Audit Report to be backed up with adequate documentation by way of Management Representation letter and the basis of preparing such certificates. In case the regulators suggest a format at a later date or issue any clarification in this regard, the above-suggested template may suitably be aligned.
RERA Audit – Challenges
1.Sufficient Knowledge of Act and Rules –Both promoter and professionals
2.Information filled during registration is erroneous – what stand will u take
3.Record / data / expenses maintenance
a. RERA Project wise
4.Allocation of common expenses RERA project-wise
a.Basis of allocation
b.Loan availed and interest apportionment to RERA project-wise
5.Reconciliation at various stages and different records
6.Clarity on the statute, being new to all
7.In case of single RERA registration – information from Landlord and compliance there on under RERD (being a Co- Promoter)
RERA Audit – tip to professionals
1.Don’t be biased on the information and report
2.Don’t be under the influence of Promoters
3.Don’t be casual on report / certification
4.Collect sufficient documents / information
5.If you don’t know, ask others
6.If you are not sure – report it
Certificates issued may become public documents and amenable under RTI