Domestic Home Sale Audit

Objectives

  • Audit of U.S. Domestic Home Sale Programs – A complete review of data, forms and process used to reimburse employee home owners when a Home Sale Program benefit applies
  • Make sure audits meet SOX compliance standards

    • Methodology

  • Review pertinent documentation
    • Relocation Policy – to understand the type of home sale program, employee eligibility and seller’s reimbursable closing costs. The types of programs include:
      • Direct Reimbursement
      • Amended Value
      • Guarantee Home Sale
      • Buyer Value Option
    • Appraisals – the usual process requires two with results within 5% of each other. If there is more than a 5% difference than a third appraisal maybe required. The treatment of these appraisals in determining value should be discussed in the relocation policy
    • Listing Agreement (exclusion clause)
    • Contract (s) of Sale
    • HUD 1 Form/RESPA Statement (Real Estate Settlement Procedures Act) this document provides full accounting of all disbursements for both the seller and buyer involved in a domestic real estate transfer. It would be important to note that the seller not be reimbursed any of the buyer’s closing costs or buyer incentives prohibited in the relocation policy
    • Copies of invoices
    • Payback Agreement
    • Copies of disbursements made on behalf of the employee as well as directly to the employee
    • Equity advance calculations and appropriateness of payment based on employee position within the company and government compliance
    • Bridge loan calculations and payments
  • Audit of U.S. Overseas Home Sale Programs – The U.S. citizen is taxed on every dollar earned. What that dollar earned is outside of the U.S. the tax implication still applies
  • An example can be the U.S. citizen who owns a home in Canada and sells that home through an employer sponsored home sale program. The financial gain earned by the U.S. citizen is subject to U.S. tax laws. Considering this tax consequence, employers may want to consider an audit of international assignment files that include U.S. employee home sale benefits