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September 25, 2018
An operational audit is an examination of how an organization conducts business, with the objective of increasing its efficiency and effectiveness.
Other objectives are to understand the risks and responsibilities of your business and find opportunities for improvement.
At a minimum, operational audits should be performed once a year for most storage facilities. If you are a larger operator, you may need to conduct an operational audit more frequently.
An operational audit of your storage facility will help you set goals, reduce your risks, identify theft and increase the economic efficiency of your facility.
Here are 19 items to include in your next audit at your storage facility:
Petty cash is for small day-to-day expenses; for example, office supplies or reimbursements to employees who purchase items for the business. There should be a petty cash log that includes all costs and uses of the cash.
A lot of petty cash expenditures is to make sure that it is being used only for business purposes.
It is also an excellent way to track expenses. A petty cash log also offers information that can help with your storage facility's taxes.
The operational audit should include the physical counting of merchandise. Including boxes, tape, tie-downs, locks, and any other items for sale at the facility.
Understanding the status of your inventory levels will ensure that you're not holding too many items at the facility.
Keeping an accurate storage unit inventory count can require a physical walk-through of the whole facility and checking every unit to make sure each unit is vacant and correctly marked.
The walk-through should make sure all rented units have tenant locks on them. Open any unrented units, making sure they are clean and ready to be rented at the drop of a dime.
This inspection is to make sure that no items are in unrented units and that the units are clean, undamaged, and rentable.
To ensure there is accountability for your on-site manager, periodically audit their weekly walk through reports.
Every tenant at your storage facility should have a file, hard copy or online is fine. This file should include the original signed lease, a copy of a state issued ID, any autopay permission forms, and signed insurance agreements.
All items in the tenant file should match the information in the facility’s management software system, including contact information.
The data should also include copies of any late and lien notices sent to the tenant. This information is imperative if a unit must go to auction.
An operational audit should also include a look at your current “past-due” tenants. Ensure that your managers are taking the appropriate steps based on your storage facility's policies to collect on delinquent payments.
The auditor should check the notes in the facility management software system to make sure the managers are noting their collection call attempts and mailing delinquent notices appropriately.
An operational audit should also include the physical inspection of the office to make sure it is clean, organized, and that merchandise is well displayed.
Any possible maintenance issues should be noted. Ensure that your office is presentable to tenants.
Your website might be the first glimpse a potential tenant receives of your storage facility, but the office is likely second.
If applicable, also audit and visually inspect the manager apartment for any maintenance issues.
Occasionally, some units are not rentable.
For example, a unit may be un-rentable because it is storing facility office equipment, cleaning supplies, or construction materials. Mark any un-rentable storage units as such, during the operational audit.
If there are any other units outside of that scope, the auditor needs to understand why those units are not ready for rent.
For example, if a unit is damaged and therefore un-rentable, the auditor should verify the damage and see if the managers have requested the appropriate repairs.
A visual inspection of the landscaping should be performed during an operational audit to ensure the facility is presentable.
If you have individual alarms on your tenants’ units, you should do an audit to make sure those alarms are working well.
Any units that do not have functional alarms should be noted and scheduled for repair.
Verify that the security system at your facility is functioning as expected. Ensure that it is recording properly and all cameras are functioning as expected.
An auditor should look at time clock records and make sure they match with the employees’ work schedules.
Any overtime should be checked and justified. An auditor should also make sure that during business hours the manager(s) was present.
If the on-site management software goes down, there should be a manual way to collect rent from tenants.
If this has been the case between audits, review all manual receipts, especially cash receipts.
Doing so will ensure accurate accounting and that the managers are not pocketing discounts given to customers.
Any fees waived should be scrutinized according to company policy.
Account for all discounts by ensuring al discount forms are correctly filled out.
Tenants that pay with cash should be more examined. Ensure that no theft has not occurred.
Inspect all rental trucks for cleanliness, correct licensing and registration, and maintenance.
An excellent operational audit requires a visual inspection of the whole facility.
Including walls, gates, floors, tenant doors, cameras, lighting, and elevators to make sure all are in good working order.
The facility should be clean and presentable. Any maintenance needed should be noted.
Because of potential abuse, double check cash deposits and have a full reconciliation.
Customer reviews are critical when conducting an operational audit of your self storage facility.
By checking your customer reviews, you can monitor your facility's online presence.
Online reviews offer great feedback for upper management and can give them information to help their managers. Consider providing an incentive for online reviews.
An auditor should check pricing to make sure tenants are paying the correct amount. Scrutinize any variation that you see.
Your property management software will provide daily reports of the day's earnings.
These reports break down the revenues from credit cards, cash, and checks. Bank deposits should match checks and cash.
Review each credit card batch report.
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