WOODBURY, N.Y., July 2, 2014 /PRNewswire-iReach/ -- Leading accounting, tax and business valuation firm Gettry Marcus CPA, P.C. discusses a co-op audit case study conducted by the firm.
A cooperative housing corporation engaged Gettry Marcus to perform an audit. The corporation, located in Manhattan, owned a parking garage for use by its shareholders. During our review of the predecessor accounting firm's work papers, Gettry Marcus noticed that a considerable amount of time was spent accounting for and reconciling garage rental income, and the amounts due to the garage operator each month.
During the audit, Gettry Marcus investigated this matter. Under the terms of the lease, the garage operator was obligated to pay a fixed monthly rent to the corporation. The garage operator was supposed to then bill the shareholders for the rent applicable to the occupied parking spaces. However, the monthly billing became the obligation of the corporation. In addition, the garage operator's obligation to pay its monthly fixed rent would be offset by the rent received from those shareholders who occupied the parking spaces. In the event that the amount of rent applicable to the shareholders' parking spaces exceeded the amount of fixed rent due from the garage operator, the corporation was required to refund the excess to the garage operator.
Gettry Marcus determined that, in effect, each month the corporation was providing the accounting for the garage operator, including billing and collections. This function was very time consuming both for the client and the auditors at the end of the year. The reason for this arrangement was attributable to a 6% New York City Sales Tax on parking. Under prior law, rent paid directly to a garage operator was subject to sales tax. However, if rent was charged by the cooperative housing corporation, the sales tax was not applicable. Gettry Marcus researched this and determined that the law had changed. Rent paid by a shareholder directly to a garage operator under the terms of a master lease was not subject to the 6% sales tax.
Based on our findings, Gettry Marcus advised the Board on a recommended course of action. Effective immediately, the garage operator began billing the shareholders directly and paying the Corporation its monthly fixed rent. The client was very appreciative because Gettry Marcus improved their cash flow and also reduced the time, cost and resources required to provide the monthly accounting.
To view additional case studies, visit the Gettry Marcus website.
Gettry Marcus CPA, P.C. is a top New York City and Long Island CPA firm with offices in Woodbury, Long Island and New York City. We provide accounting, tax, and consulting services to commercial businesses, high net worth individuals and various industries which include real estate and health care. We have one of the premier and most credentialed business valuation, litigation and forensic accounting groups in the New York Area. Our experience in diverse industries and a highly talented and experienced professional staff gives us the ability to share valuable insights into our clients' businesses, to better understand their goals and problems and to help them attain the vision they have for their company.
Gettry Marcus is "Always Looking Deeper" to build value for our clients.
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