Banks, Lenders & Investors
Escrow Account & Fund-Flow Audit
Review coordination for account records, certificates and audit filings; findings depend on records and agreed scope.
What this service involves
The designated account is meant to keep customer money for the project. A fund-flow audit tests whether it has done that, by reading statements against the withdrawal certificates, project cost records and progress at each stage.
Chartered Accountants trace withdrawals and compare them with certificates, while engineers and architects check the progress claimed. Differences are reported with the documents behind them. The audit cannot see money that was moved outside the accounts supplied.
What is different from routine account compliance?
An independent fund-flow review tests the movement and use of money against a defined mandate and evidence set. It may re-examine certificates, annual filings, receipts and transfers rather than only help the promoter prepare them. The engagement should identify the reporting period, accounts, transaction population, intended users and whether it is an agreed-procedures review or another professional assignment.
The designated separate account should not be confused with a contractual escrow. Section 4(2)(l)(D) and MahaRERA Order 56/2024 govern project collections and withdrawals, including restrictions relevant to bank control. Identify the collection, separate, transaction and any multiple-promoter accounts applicable to the project before tracing money. Reviewing only one selected statement can miss important routing.
How are potential diversion indicators investigated?
Reconcile allottee receipts to bank credits, transfers to the separate account, certified withdrawal capacity and actual expenditure. Test selected transactions to underlying invoices, contracts and project allocation records. Inter-project transfers, related-party payments or round-number movements may require explanation, but they are indicators for investigation rather than proof of wrongdoing by themselves.
Re-verify the source and scope of professional certificates and annual audit filings. Confirm that the relevant project, dates and cumulative figures agree with the books and statements. Where evidence is missing, state what could not be tested. Management explanations should be recorded as such and evaluated against independent evidence where available. A reviewer should not silently adopt an earlier certificate as proof of every later payment.
How should findings and independence be protected?
Classify findings as verified exceptions, unreconciled items, missing evidence or matters outside scope. State the procedure performed and avoid a broader assurance than the work supports. The report may contain sensitive banking and customer information and should be delivered only to authorised recipients under agreed reliance terms. It is not public marketing material.
Consider conflicts and independence if the proposed reviewer or related team previously prepared the records or certificates being examined. The named professional must determine whether the assignment can be accepted and under what safeguards. Remediation, regulatory reporting, legal proceedings and forensic investigation may require separate instructions. No finding of fraud, clean-account conclusion or recovery outcome is assumed before the actual review.
Practical decision points
If collections appear in an account outside the mapped project structure, trace the receipts, subsequent transfers and supporting explanation. The finding should identify what was tested and what remains unverified. Do not declare diversion from an account label alone, but do not treat a later transfer as automatically curing every earlier exception.
A certificate re-verification should compare the signed document, reporting date, project scope and working basis with actual withdrawals. Where earlier figures are revised, obtain the responsible professional’s explanation and preserve the history. The review should not silently replace a prior certificate with a reconstructed working prepared by management.
The final report should distinguish factual procedures from assurance conclusions and identify authorised recipients. Any suspected misconduct may require legal or specialist forensic advice beyond routine reconciliation. Independence should be addressed before acceptance, particularly where the proposed reviewer helped prepare the material being examined. The client should know the limits of sampling, access and confirmation. No clean-account statement, allegation of fraud or recovery expectation is assumed until supported by the actual assignment and evidence.
Who needs it
Lenders, investors and developers who want an independent check of the account.
Documents usually required
- Designated account statements
- Certificates for each withdrawal
- Cost and progress records
- Annual statements and audit reports
- Books of account
Step-by-step process
- Agree scope and period
- Collect statements and certificates
- Trace each withdrawal to its certificate
- Compare with progress and cost
- List differences and explanations sought
- Report findings
Typical timeline
Depends on the number of months and volume of transactions. Timing depends on the matter, document readiness and the relevant authority process; confirm the scope and timeline before engagement.
Delivered by
Chartered Accountant, Advocate. The disciplines involved in a particular engagement are confirmed in the proposal.
The scope and responsible professional are identified in the engagement. Professional certificates are signed in the relevant professional or firm's own name. NXS48 is not an examination or certifying body.
Statutory and official references
- RERA Act, 2016, Section 4 (application for registration)
- RERA Act, 2016, Section 11 (functions and duties of promoter)
- Chartered Accountants Act, 1949 and ICAI guidance on certificates
Last reviewed 2026-10-24. Owner-approved for publication. Section references and rates should be verified against the current Act, rules and circulars before reliance. This page is informational, not legal advice.
Frequently asked questions
Can the audit prove diversion of funds?
It reports differences on the records supplied. It does not make a finding of misconduct.
Who sees the report?
The client who commissioned it, as agreed.
Related services
Who this serves
- Banks and lenders
- Investors
- Developers
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