PT THE AUDITOR Management Agreements: Goo
parking operator. It can be simple or complex. Its purpose is to protect both parties and ensure that there are no misunderstand- ings when a particular issue comes up. The management agreement can set forth the amount of
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money a manager is to be paid, the amount of profit an operator gets from the job, who buys the insurance (and perhaps even where it comes from). Much is sometimes hidden in those devilish details of the
management agreement, andmany an owner, at his (or her) peril, doesn’t read the fine print. Letme give you an example. Inmost agreements, an operator is required to give the own-
er amonthlymanagement
statement.This is the ongoing P and L for the garage, showing a complete accounting of all income and expenses for the operation. The owner should review the state- ment and look at all the expenses and be sure they are appropri- ate and in line with themanagement agreement. I was assisting one owner in aWest Coast city a few years
H, THE FAMOUSMANAGEMENT agreement.We can’t live with it; we can’t live without it.
This is the document that sets out the rules between the building owner and the
ago and was taken a bit aback when I found that the manager’s salary was being paid by two garages. It seemed that this particular manager was shared by two of
the owner’s garages. Fair enough. But his salary was being paid 100% by each. I’m certain it was a clerical error, but it never would have been noticed had I not been carefully reading the monthly statements. I also caught some supplies. It seems that the operator was
frugally buying supplies (paper, cleaning supplies, etc) in bulk and then distributing them out to its various locations. However, the entire cost of the supplies was inadvertently billed to one location. (Can anyone say 20 Cases of toilet paper). So, what do you do? In a situation where an operator
deposits all the money from the garage into their account and then provides the owner with a monthly check, this is a difficult problem. Straightening out the expenses can be an issue. On the other hand, how can you expect an operator to front
the costs of running a garage? If the operator takes over in Janu- ary and pays the bills for January and then provides an income statement by, say, Feb. 15, you argue over it for a couple ofweeks and then cut a check. It can be the middle ofMarch before the operator sees any money. By that time, they are, what, 10 weeks into funding your operation. Sometimes an operator will advance the money and charge
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