Off-plan sales — the project accountant

The off-plan sales regime rests on one idea: buyers' money does not enter the developer's treasury but an escrow account in the project's name, and it leaves only against documented progress. The project accountant is the financial link in this control, alongside the engineering consultant who certifies progress and the escrow account trustee.

Duties of the project accountant

The implementing regulation for off-plan sale and lease of real estate projects sets out specific duties, principally:

• Monitoring and auditing the financial data on the value of contracted units and confirming their deposit in the escrow account
• Reviewing, auditing and certifying the financial documents required for disbursements on the project
• Reporting on the adequacy of withdrawals from the escrow account against the estimated cost to complete the project
• Preparing reports on the escrow account's financial and accounting transactions, the project's statement of financial position and disbursements, with supporting documents
• Submitting periodic reports to the competent committee
• Issuing the final report and closing the escrow account after the completion certificate
• Presenting the project's financial statements at its end or on the Authority's request

Why it matters to the developer

The periodic financial report is not a formality: it is what opens disbursements from the escrow account. A late report or weak supporting documents stop the project's cash flow during construction, the most expensive moment for money to stop.

Discipline in this file also shapes the developer's relationship with the regulator, financiers and buyers alike.

Stages of the project accountant's work

The role runs from preparation of the project file to closure of the escrow account, in five stages:

• Appointment: the project accountant is named in the project file with the Real Estate General Authority, and an engagement letter sets out the scope, term and reporting mechanism.
• Preparation: review of the feasibility study and estimated project cost, the escrow account agreement, and the deposit and disbursement mechanism agreed with the trustee.
• Monitoring: confirming that buyers' payments are deposited in the escrow account, and reviewing the documents for each disbursement request against the engineering consultant's certificate of completion before certifying it.
• Reporting: preparing the report on the adequacy of withdrawals against the remaining cost to complete, and the periodic financial reports submitted to the competent committee.
• Closure: after the completion certificate, issuing the final report, closing the escrow account and presenting the project's financial statements.

The accountant's certification of disbursements is an independent professional attestation; for that reason we do not combine this engagement with keeping the same project's books, in line with independence rules.

Qualification

Prime CPA Company For Accounting and Auditing is licensed by the Saudi Organization for Chartered and Professional Accountants under licence No. 1122, and qualified by the Real Estate General Authority to supervise off-plan real estate projects under project accountant qualification certificate No. A0593.

Deliverables

Certified periodic reports that enable disbursement from the escrow account, and a final report closing it.

What we need to begin

• The off-plan project licence and its details with the Authority
• The escrow account agreement with the trustee
• The feasibility study and estimated project cost
• The payment schedule and signed sale or lease contracts
• The engineering consultant's progress reports
• Escrow account statements and prior disbursement documents

Frequently asked questions

What does the project accountant do in an off-plan project?

Confirms that the value of contracted units is deposited in the escrow account, certifies disbursement documents, prepares the report on the adequacy of withdrawals against the estimated cost to complete, submits periodic reports to the committee, and issues the final report and closes the account after the completion certificate.

What is the difference between the project accountant and the engineering consultant?

The engineering consultant certifies the actual percentage of completion on site. The project accountant verifies the financial side: deposits and disbursements, matched against documents and the remaining cost.

Does the project report replace the audit of the developer's financial statements?

No. Escrow account reports relate to the project; the audit of the company's financial statements is a separate engagement.

When is the project accountant appointed?

During preparation of the project file with the Real Estate General Authority, before off-plan sales begin, because the escrow account and its disbursement mechanism depend on the accountant from the outset.

Which reports does the project accountant submit?

Periodic reports on the escrow account's financial transactions and disbursements with supporting documents, the report on the adequacy of withdrawals against the estimated cost to complete, the final report on closing the account, and the project's financial statements at its end or on the Authority's request.

Must the project accountant be qualified by the Real Estate General Authority?

Yes. The regulation requires the firm to be licensed by SOCPA and its accountants to pass the qualification programme approved by the Real Estate General Authority. Prime CPA is qualified under project accountant qualification certificate No. A0593.