Company: CIO
Filing Date: 2025-02-20
Form Type: 10-K
Source: 0000950170-25-023714
Chunk: 4

Company: City Office REIT, Inc.
Filing Date: 2025-02-20
Form: 10-K
Item: Item 15
Chunk 4
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 on a straight-line basis for new and modified leases is impacted by the determination of who is the accounting owner of the tenant improvements of the leased space for accounting purposes. The cost to construct tenant improvements is either recorded as a reduction of lease revenue on a straight-line basis over the lease term or as a capital asset amortized on a straight-line basis over the lease term, depending on whether the tenant improvements are determined to be owned by the Company or the tenant. As discussed in Note 9 to the consolidated financial statements, during the year ended December 31, 2024, the Company reported $170.7 million of lease revenue, which includes revenue related to new and modified lease arrangements.  

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 We identified the assessment of the Company’s determination of revenue recognition on a straight-line basis for new and modified lease arrangements as a critical audit matter. Assessing the determination of the ownership of tenant improvements and the impact on revenue recognized required complex auditor judgment and increased extent of audit effort. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s process over recognition of lease revenue for new and modified lease arrangements. This included controls related to the assessment of the ownership of tenant improvements and the accuracy of straight-line rent calculations. We examined a selection of new and modified lease arrangements and (1) compared the terms contained in the lease agreements to the factors assessed by the Company and (2) evaluated whether the costs incurred, incentives granted, and payments made in connection with the new or modified lease arrangements were tenant improvements owned by the Company or lease incentives. For this selection of new and modified lease arrangements, we assessed whether the straight-line lease revenue calculations were consistent with the conclusions on the ownership of tenant improvements./s/ KPMG LLPChartered Professional AccountantsWe have served as the Company’s auditor since 2013.Vancouver, CanadaFebruary 20, 2025 

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 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Stockholders and Board of DirectorsCity Office REIT, Inc.Opinion on Internal Control Over Financial Reporting We have audited City Office REIT, Inc.’s (the Company) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects,