Enter Strategic Partnerships with Confidence When Utilizing Proactive Assurance
When it comes to pulling off a major merger or successfully implementing a new system, real estate organizations can always use another set of specialists on their team.
That’s where Baker Tilly’s risk advisors come in. Rather than only hiring auditors for a post-mortem on your most important business moves, enlist these professionals from the beginning and leverage their experience and critical eye throughout the process to secure a successful outcome from the get-go. TRD sat down with Ben Quigley, Principal and Real Estate Risk Advisory Leader, Kelsey Renner, Risk Advisory Senior Manager, and Mike Kamienski, Partner and National Real Estate Practice Leader, to learn how adding Baker Tilly to your team can help your next major business change succeed and make you more attractive to potential new partners.
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Internal audits can have a negative connotation in the corporate world. As a post-facto, reactive process, a historic approach to internal audit focuses stakeholders on what went wrong instead of helping them do it right in the first place.
“Internal auditors can come across as the police,” explains Kamienski. “With proactive assurance, we’re on your team and working with you to put leading practices in place ahead of time.”
One of the main ways that Baker Tilly’s proactive assurance process helps an organization is by bringing in specialists who know what a successful example of this change looks like, leveraging their knowledge to plan out a specific course of action based on what has worked in the past.
“For organizations that haven’t made a specific change before, that’s where this process adds the most value,” says Quigley. “If an organization is implementing a system, one of our specialists on the internal audit team will be someone who has done a successful implementation of that same system.”
It’s the infamous “unknown unknowns” that will get an organization into trouble, and Baker Tilly’s proactive assurance process aims to not only avoid these pitfalls, but help their client adjust to any issues that crop up on the fly, keeping the change process on track throughout its execution.
“When you don’t do proactive assurance, these problems occur,” says Renner. “But when you’re following up and expecting what’s going to happen, the things that could go wrong aren’t going wrong.”
Proactive Assurance in Action
The Baker Tilly team walked us through a typical proactive assurance process, giving us real estate-specific examples along the way.
“The process is broken down into three phases,” explains Quigley. “There’s pre-implementation, there’s what we call ‘in-flight reviews,’ and then we have the post-implementation review.”
The first phase begins when someone in an organization has an idea for a change, whether that’s the implementation of a new process or the joining of a new partnership. “In the real estate world, we’re seeing a lot of investors using third parties,” explains Renner, “whether that’s entering into a joint venture or bringing on a third party property manager.”
These kinds of partnerships are great use-cases for proactive assurance because they introduce a host of variables and potential failure points. “Historically, parties would enter into an agreement based on having the same ideas or their management getting along, and then all of a sudden they’re doing their accounting and financial reporting and nothing works according to their original agreement,” said Renner. “Of course by then, it’s too late.”
Baker Tilly’s proactive assurance process anticipates these problems by enlisting specialists who can ask these questions ahead of time and create an execution plan based on successful examples from their own experience. This is also the point where Baker Tilly’s team identifies the five or six biggest risks throughout the process; these risk points will be the focus of their ‘in-flight reviews.’
“Let’s say you’re implementing a new system, and it’s going to take two years,” says Quigley. “You don’t need us sitting side-by-side with you every single day. We want to be efficient. So we’re going to drop in throughout the change and evaluate those big risks to make sure your organization has the best chance of succeeding.”
When one of these check-ins reveals a potential problem, Baker Tilly’s specialists provide real-time feedback to correct the issue as it occurs, preventing further breakdown and keeping the change on a successful track.
Proactive assurance ideally makes the third phase, the post-implementation review, quick and easy. “Hopefully you don’t have to do anything at the end, because the change has gone live successfully,” says Quigley. “That’s the beauty of proactive assurance: the feedback you’re getting is in real-time.”
The Value of Proactive Assurance
The benefits of proactive assurance tend to be invisible because change processes that go through the pre-implementation and real-time reviews don’t fail. Kamienski told us about a large private equity client of his that didn’t do any proactive assurance before entering into a joint venture with multiple partners.
“There was a security breach where a significant financial amount was sent to the wrong person via a cyberattack,” he recalls. “That’s a real-life example where a little proactive assurance on the front end probably could have prevented a major loss.”
One of the visible ways that proactive assurance can boost your business is by serving as a selling point when pitching to potential partners. Simply put, an organization that puts all of its changes through proactive assurance will be a better partner.
“Particularly in the private equity world, there’s such competition out there for new investors,” says Kamienski. “Being proactive and having well-documented, thought-through compliance programs and protocols is a huge marketing piece when looking for potential investors.”
When the deals can reach well into the 10 and 11 figures, having the confidence that your new partner will anticipate and react to potential problems before they occur can be the deciding factor in whether to enter into a particular relationship.
If you’re considering a major change at your organization, add Baker Tilly’s proactive assurance specialists to your team and plan for success.