Management Operation Agreements – Locally and Globally

by | Sep 28, 2020 | Contract Compliance, PKF Texas - The Entrepreneur's Playbook®, Tax and Accounting Desk

Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, and I’m back once again with Carlos Gomez, an Audit Manager and one of the faces of the PKF Texas Contract Compliance Services team. Carlos, welcome back to the playbook.

Carlos: Hey, Jen.

Jen: We’ve talked about a whole bunch of different agreements with Contract Compliance Services, and I know you’ve mentioned management operation agreements. Are those kind of the whole agreement over everything?

Carlos: It has to do a lot with real estate or energy production. There’ll be cases where you may own some land or a building and someone’s actually doing the renting out of it on your behalf. Whether it be commercial, residential or you have the rights to a well, and someone’s doing the production of the oil from there.

Jen: So, what would trigger a company to say, “Yes, I need a management or an operation agreement?”

Carlos: Whenever there’s a shared service or you’re not going to operate it yourself, you just really need some help from someone in the industry who has some expertise in that specific industry, whether be real estate or energy.

Jen: So, then, does the company have rights to a specific type of audit?

Carlos: They do. Most management operation agreements, third-party agreements in general, have an audit clause. And those audit clauses are wonderful because it gives you an opportunity to bring in a third party, like us, to be able to do a review of the accounting records to make sure they’re in line with the agreement, and that you’re sharing the right amount of revenue, expenses and other things.

Jen: So, what if the company is worried about costs?

Carlos: Good thing — we have ways to help mitigate that.

Jen: Of course, we do.

Carlos: Especially if you have multiple management operations agreements. If we’re doing four or five different locations, it becomes a really cost beneficial analysis after that.

Jen: Perfect. Yeah, because you can just template it out, type thing.

Carlos: Right, because it is under one company, so all the accounting is kept in one location, but it may be over four or five different agreements.

Jen: Do we do any international work or is this predominantly in the United States?

Carlos: We’re all over the world, yeah. I’ve done engagements from China, down to South America, Latin America and then, obviously, all over the U.S.

Jen: Perfect. I was going to say that energy, because we know energy is global.

Carlos: Yes, and Canada.

Jen: And Canada, of course. Perfect. All right, well, Carlos we will get you back to talk a little bit more about Contract Compliance Services, sound good?

Carlos: Yes, ma’am.

Jen: Perfect, thank you. For more information about this topic, visit This has been another Thought Leader Production brought to you by PKF Texas – The Entrepreneur’s Playbook. Tune in next week for another chapter.

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