While some people dread auditing time, it’s actually a great opportunity for real estate agencies to take stock of their business, check their compliance and look for new ways to minimise risk.
While some people dread auditing time, it’s actually a great opportunity for real estate agencies to take stock of their business, check their compliance and look for new ways to minimise risk.
Real estate agencies have to adhere to special auditing obligations because they hold money in trust accounts on behalf of their clients. As a result, licensees are required to organise an audit by the specified date for the state or territory they operate in.
Trust accounts are governed by legislation which stipulate that Australian real estate agents are required to have a trust account for holding client money.
As a result, they are required to undertake an annual trust account audit which makes sure the trust monies are being managed properly and that it’s compliant with state legislation.
According to DFK Laurence Varnay Partner, Faizal Ajmat, if you’re a real estate agent who operates a trust account, it’s important to know when your trust account audit is due so you don’t accidentally miss it.
“Trust account audit requirements, periods and due dates vary depending on the state or territory in which you operate so it’s important to check the relevant deadlines so that you’re prepared ahead of time,” Faizal said.
“For example, in NSW, normally the audit must be completed within three months after the end of the financial year, however in 2021 this deadline has been extended to 31.12.2021 due to the COVID restrictions on businesses. In Queensland, the audit deadline is based on the month that your licence was obtained.”
“For example, in NSW, normally the audit must be completed within three months after the end of the financial year, however in 2021 this deadline has been extended to 31.12.2021 due to the COVID restrictions on businesses. In Queensland, the audit deadline is based on the month that your licence was obtained.”
Although the requirements for reconciliation may vary from state to state, we suggest reconciling daily in order to ensure you stay on top of things.
It’s easier to uncover any discrepancies in your trust accounts and rectify them immediately if you are reconciling daily while ensuring your records are accurately maintained and kept up-to-date in order to avoid any administrative errors.
While it can be tempting to accept cash payments for rent and other fees, it still has to be banked manually. Make sure you ask for a digital transfer of funds to ensure there is a digital paper trail of all transactions in and out of the trust account.
Just as it’s important to maintain a digital footprint, it’s essential to document your processes through the use of checklists and playbooks. Make sure you keep it formal and detailed to avoid any mistakes so that come audit time, the auditor is able to clearly understand and navigate your trust account.
As a specialist auditing firm, we see ourselves as more than just auditors and take a proactive 360 degree view of your business which allows us to identify any opportunities along the way.
Our expert audit team is on hand to provide a range of auditing services so contact us today to discuss how we can help you with your trust account auditing tips.
By email, phone, or in-person – our advisors are ready to discuss how we can help take your business to the next level.
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