Thank you Grafter!
Seriously, I was about to give up since everyone is talking about this like they have never been audited and assuming the same about everyone else. And actually, Jeff is not one of those people. His post was very informative. But I had the same response as you did.
1) I own a company that is regularly audited under IFRS, so pretty much the same standard as a US public co so I know what is required. Was it painful the first year like Jeff described? Hell YES. I don't think Jeff even did it justice. It was awful and I can totally see where he is coming from. But then you learn that going forward you have to photocopy and scan each money order before you take it to the bank. This applies to a lot of the painful aspects of an audit. The next year it's a lot better.
2) not sure what Jeff meant by "And no, the manager doesn’t have to do all the work that we did in terms of bookkeeping. They literally send a statement." Maybe ENDI won't see it because they will just get an invoice but the manager HAS to do all that bookkeeping for their own tax purposes, especially if they manage 100+ homes. There might be a slight saving because the standard is not as high as an audit but I'm guessing it's 80-90% of the accounting workload (assuming again, that we are comparing a private 100 house manager vs a public one in the steady state, not in their first audit year). Any of that benefit will be eaten up by the profit the external manager will demand, and then some.
Listen, I now understand the situation from Jeff's point of view and if I was him I'd bail too. That sounds like a nightmare compared to how he used to run things. But ENDI presenting this as a way of lowering costs, and keeping the high quality of product and service by going external is almost insulting. The management of these properties will now cost more (all-in economic costs), not less, and they will be managed worse, not better. Shareholders will pay a price for making ENDI management's life simpler and easier.
