Why are Self-Storage Operational Audits Necessary?

Why an Operational Audit?

Rather than a financial or theft audit, self-storage operational audits aim to ensure that all policies and procedures are appropriately organized and implemented. Operational audits are essential if you have multiple locations, as you want them all to operate consistently. This means using the same forms and following the same processes for rental agreements, payments, and all other activities.

During an Audit, What Happens Out on the Property?

I compare what the computer software (SiteLink is by far the most common software I come across) indicates with what is happening on the property. If the software shows that a unit is rented, I check if it is rented. If it means that a unit is rented but also looks vacant, there could be a few possibilities: it might be a new rental, someone could have moved out, or there could have been a break-in. I need to investigate further.

When I walk through the property, I have a comprehensive checklist. I pay attention to every detail, including counting doors, something I often emphasize. There is also a section for comments where I note anything problematic, such as if there are two locks on a unit or if it is locked in an open position. I note all maintenance items and issues, even though I primarily conduct a physical inventory of the units. These details are essential.

For instance, I found an open storage unit on a recent operational audit visit. We found a few leftover items at the bottom, like some trash. Everything else had been removed, indicating that the previous tenants had moved out without notifying the office staff. The staff assumed the move-out…but it was, in reality, a break-in. The key point is that you could get in trouble if you do not investigate everything you encounter during the walkthrough.

Do You Look at Rental Agreements During an Audit?

I check every rental agreement to ensure it is complete, has the correct signatures, and is for the right unit. During my self-storage operational audits, I often find rental agreements that are incorrect or even missing. Reviewing your rental agreements and verifying they are signed and accurate is essential. Sometimes, we review the paperwork for unit 100 and accidentally return the documents to the wrong location, which can lead to misfiling. Therefore, before calling the customer, I thoroughly examine every piece of paper in the files to locate the correct document, as it is likely misfiled. Misfiling is easy to do, so careful attention is crucial.

One issue is that many businesses now rely solely on cloud storage. During an audit at one store, I discovered that all their rental agreements were supposed to be saved to the cloud. However, they realized they were saving them incorrectly, so they had no rental agreements for their customers. This was quite alarming!

Now, they need to obtain new agreements from all those customers, which is nearly impossible. However, there are ways to manage this situation. For instance, if the customers come into the office, they can sign the agreements then and there. Alternatively, you could send the documents to them and ask them to return them by mail, but it’s quite a hassle. It’s dangerous, and I wouldn’t conduct any lien sales during that time!

Do You Check Petty Cash During an Audit?

I always keep track of petty cash. There was a time when I told a manager I needed to count the petty cash. He responded, “We just took some things to the bank. When we get back, we’ll bring it here.” They returned but didn’t bring the deposit slip, which totaled $17,000. They had waited a week to deposit the cash and never returned to the office. When I confronted them, they said, “We don’t have it right now; we used it.”

Don’t Put This Off!

In conclusion, operational audits are crucial for businesses with multiple locations to ensure consistency across all sites. By implementing uniform forms and standardized processes for rental agreements, payments, and various activities, organizations can maintain a cohesive operation and enhance overall efficiency. If you need help getting your policies and procedures on track, SkilCheck has an amazing Training & Procedures Manual for Self-Storage Facilities ready for you to customize!