What is a turnover certificate and why might your landlord require one?

A growing opportunity for retail businesses

Corporate
Planning
Retail and wholesale

For many retail businesses, turnover certificates are a routine but important part of lease compliance. They are often required by landlords and can directly affect the rent payable under a turnover-based lease.

What is a turnover certificate?

A turnover certificate is typically an agreed-upon procedures engagement.

In simple terms, the landlord sets out specific procedures (checks) that must be performed. We carry out those procedures and issue a report confirming:

The procedures performed
The findings from our work
Whether any issues were identified

The report is accompanied by the client’s turnover breakdown schedule, which forms the basis of the certificate submitted to the landlord.

The certificate confirms the level of income generated during a specific period (usually 12 months, although this can vary depending on the lease). Turnover is normally reported excluding VAT, taxes and discounts.

It is sometimes referred to as a “report of factual findings”, although it is more widely known in practice as a turnover certificate.

Why are turnover certificates required and who needs them?

In most cases, the requirement to provide a turnover certificate is set out in the lease agreement.

They are predominantly a retail requirement and are most common where rent is linked, in full or in part, to store turnover. The landlord wants independent confirmation that the turnover figure has been calculated correctly in line with the terms of the lease.

For larger retail groups, this requirement often applies to each individual store rather than the company as a whole. It is not unusual for multiple certificates to be prepared in batches throughout the year.

Sometimes, the certificate may also be used for external purposes, such as supporting loan or banking applications.

Can turnover certificates be prepared alongside the statutory audit?

Where statutory audits are also performed, the process for turnover certificates is often more efficient as teams already have an understanding of a client’s systems and controls, which reduces duplication of work.

However, acting as statutory auditor is not a requirement, and our Audit & Assurance team at Price Bailey regularly perform turnover certificate engagements on a standalone basis for clients where we do not undertake the statutory audit.

What does the process involve?

From our perspective, the process is structured and straightforward.

Typically, we will:

Obtain an understanding of how the sales system operates
Obtain the sales data for the relevant period
Review the client’s reconciliation
Perform the specific procedures required by the landlord

Common procedures requested include:

Performing an arithmetic accuracy check of the turnover rent schedule provided
Compare the total turnover figure included in the turnover rent schedule to the turnover certificate provided
Compare the total turnover figure extracted from the accounting system to the figure included within the turnover rent schedule

As this is an agreed-upon procedures engagement, our Audit & Assurance team perform exactly what the landlord requires. If additional procedures are requested, these can be incorporated into the engagement letter and report.

What information is required from the client?

To complete the work, we typically require:

Sales data for the relevant period
The draft turnover certificate
The client’s reconciliation

Where information is complete and fully reconciled, turnaround times are typically quick, enabling us to meet agreed deadlines.

We also have a dedicated team experienced in carrying out this work, meaning the process is efficient and well understood.

A growing opportunity for retail businesses

Turnover certificate engagements are often process-driven and efficient to deliver. For retail businesses operating multiple stores, having a clear and reliable process in place can reduce delays and ensure lease obligations are met without disruption.

How can Price Bailey help?

Price Bailey provides turnover certificate services to retail clients across the UK.

Whether we act as your statutory auditor or not, we can:

Perform the agreed-upon procedures required under your lease
Work with your internal finance team to obtain and reconcile the necessary data
Deliver within tight reporting deadlines
Support multi-store reporting requirements

If you would like to discuss your lease requirements or upcoming certification deadlines, please get in touch with our specialist Retail Audit & Assurance team using the form below.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firms mentioned.

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