The time of year that everyone dreads is here again. Yes, it’s audit time. Repeat after me. Take a deep breath. Count to 10. Reach for the chocolate bar. Read our handy audit checklist. Blow your audit out of the water.
Simple!
No we understand being audited is not all fun and games. It can be stressful, yes. It can be time consuming. Maybe not.
Our audit checklist is designed to get everything your auditor will request in order. That way you’ll have everything you need on the spot. This will make your audit a less stressful experience and the added bonus of a happy auditor.
It’s All About Sample Size
Many of our clients freak out thinking they need a year’s worth of financial records for their audit. Wrong. This would first of all take far too much time for everybody involved and is an unrealistic expectation. Your auditor will be looking at the previous year’s financial records and generally, over just a three month period. They will establish an overall audit conclusion based upon this three month period.
So that should help you feel more at ease to begin with!
Have a read through our audit checklist, satisfy everything on the list and you’ll be halfway there.
Your Audit Checklist
A standard audit will request the following items for each trust account by month:
- Receipts cashbook / receipts journal
- Payments cashbook / payments journal
- Ledger accounts
- Trial balance
- Reconciliation
- Hard copy of the bank statement (not transaction history) plus any statement records you’ve used when reconciling
- List of any account adjustments
- Copies of EFT transfers
- Remittance advices
- Unpresented cheques list
- Unpresented deposits list
- Journal report
- Banking deposit slips
- Cheque book including any cancelled cheques
You may be requested to supply copies of receipts from your trust accounting software. Have access to these files if requested.
Additional Items
On top of these audit requests, your auditor will also be checking:
- Depending on your state, have records been made in English or can they convert to English?
- Has the trust account fallen into negative throughout the year?
- Depending on your state, has the licensee, licensed agent or officer in effective control been signing off on records within the prescribed period?
- Has trust money been banked within prescribed time?
- Have statement of accounts been provided?
- Do source documents contain the UID? (NSW only)
- Are transactions sequential and provide a clean audit trail?
- Is the software used by the agency compliant within the relevant legislation?
What is a Qualified Audit?
Unfortunately, some audit wording can be confusing. In NSW, if you fail your audit or are in breach of the PSBA Act or Regulations, you will receive a ‘Qualified Audit’. Meaning you have failed your audit.
What to do if you Fail your Audit
If you receive a Qualified Audit, you must notify the NSW Fair Trading and may be selected at random for a further follow up.
Pass Your Next Audit with Flying Colours
Audit breaches can incur a lot of additional time and stress on an agency. To ensure you pass your next audit with flying colours, engage a qualified trust accounting professional. They can qualified and specialise in the trust accounting business every single day. It’s what we do. End of Month Angels can ensure audit stress is a thing of your past.
Engaging a trust accounting specialist will ensure:
- Your financials are all in place
- You are up-to-date with your relevant State regulations
- You are compliant meaning less chance of breaches
- Your audit process is well managed
- You can focus on what you do best
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~ Jane Morgan is the Director of End of Month Angels, a consultancy firm specialising in Trust Accounting. Jane knows the legislative requirements of running a successful Real Estate office through her 19 years industry experience. Don’t trust just anyone with your trust accounting. Trust End of Month Angels and get back to what you do best – growing your business.