Topic: Internal Control for Accounts Payable

We just started a small multifamily business last year. We have a property management company doing all the monthly financials for us, however, the month end financials does not match to our budget. We are informed that because our budget was too detailed, there are not enough room on the sheet for all GL codes. Also, we have no control over what is being paid and getting the backup for CAPEX and main. expenses. Any suggestion on how to impost internal control on the PM level?

Get a new property management company that can make your financials match your line items. As well, on some level you have to trust the management company to do what you pay them to do for you. However, a detailed line item General Ledger for expenses and date paid should be provided to you with your financials monthly. CAPEX should be based on approved budget given to them or require your approval in advance to spend additional funds and would be broken out in a separate report following the monthly A/P G/L by G/L code & vendor and accrue as used on the report until year end. The G/L codes can include many things but an accounting code list would offer sub-codes detailing what each line item, for example advertising can include bandit signs, balloons, helium,etc...and business cards or those can go under Printing and have brochures & letterhead included. In the end it is all under a larger G/L of Office & Administration. Also, The payroll, taxes & utilities MUST be paid...otherwise give them boundaries and negotiate until you both feel comfortable and have trust.Good Luck!

Melissa, thank you for your advise. I will go over the Financials and budget one more time with the management company and request the CAPEX on a separate report. Should I be looking for new PMs as well?