Are you aware of the documents required to be kept in your Real Estate audit file? Contrary to popular belief, the audit file is not your monthly trust accounting records, although they will be something required to be sighted by your auditor, an audit file directly relates to the documents that facilitate the setting up and statutory obligations in meeting the trust accounting requirements under the Property Stock & Business Agents Act 2002 and Property Stock & Business Agents Regulations 2014.

So would you pass the test?

At this point I bet you’re saying ‘yes’.

The following is a list of 10 things that are a minimum requirement for your audit file. The list is split into two parts. The first list is applicable to all agencies. The second list may not be applicable to your agency, depending on how long you’ve been operating, the size of your agency or the nature of your agency (Property Management or Sales only business)

I challenge you to take off your Real Estate cap and put on your auditors cap. Be honest. The test is designed to make you aware of your trust accounting obligations. If you score less than 10 then this is an opportunity for you to put these items in place before your next annual audit.

  1. Blue Form (2 points)
  2. Used Cheque & Deposit Books (2 points)
  3. OneGov Registration/s (2 points)
  4. Delegation of Authority (2 points)
  5. Annual Audit Reports (2 points)

Score yourself out of 10 points. However if the following items apply to you, then add additional points where applicable.

  1. Pink Forms (1 point)
  2. Green Forms (1 point)
  3. Overdrawn Trust Account Notice to Fair Trading (1 point)
  4. Notifications of Dishonoured Trust Cheques (1 point)
  5. Letters to OSR for unclaimed money (1 point)

So I ask again, do you pass the test? Did you score a perfect 10 or more points?

Blue Forms

This is the form you complete when you open the trust account under Section 86 (4). Although this is soon to be replaced by the OneGov registration process after 30th June 2015, so retain the original document.

Used Cheque & Deposit Books

Refers to the cheque butts of completed cheque books including any cancelled cheques that have been folded and retained inside the cheque book. Also keep any completed deposit books for 3 years.

OneGov Registrations

Required for all new trust accounts as of 1st January 2015 and existing trust accounts before 30th June 2015. Keep a copy of the signed duplicate form on file, which has your UID number on it. One form per trust account.

Delegation of Authority

Under Regulation 31, the Licensee may delegate their authority to no more than 2 employees in at each place of business to sign cheques and effect EFT transactions. The delegation must be in writing and signed by the Licensee and the employee. You can also retract in writing at any time.

Annual Audit Reports

Under Section 111, you’re required to keep the copy of all Audit Reports on file for up to 3 years, including qualified audit reports and evidence that the audit was sent to Fair Trading.

Pink Forms

The form required to be completed when opening an Interest Bearing Deposit (IBD) account, you need to retain a signed/stamped copy of this document for each IBD you have opened on behalf of a Vendor/Purchaser for invested sale deposits.

Green Forms (If applicable)

Have you closed a trust account? If so then you’re required to retain a copy of the signed, stamped form with evidence that you’ve forwarded a copy to Fair Trading.

Overdrawn Trust Account Notices

Hopefully you’ve never had to write one of these letters, however as previously discussed in my article titled ‘Overdrawn Trust Accounts – Notify or Face the Fine’ it can sometimes happen beyond our control. The letter details the reasons why your trust account became overdrawn and what you did to rectify the issue.

Dishonoured Trust Cheques

Similar to overdrawn trust accounts but slightly different as the trust account may have become overdrawn by fault of bank errors or EFT transactions rather than writing a cheque which resulted in an overdrawn trust account. The notice details the cheque number, reason for the error and what actions taken to rectify the error.

Letters to OSR for Unclaimed Trust Money

Required once the unclaimed funds are more than 2 years old. It is simply a statement to the Office of State Revenue which details the attempts made to locate the owner of the unidentified trust funds. If you are unsure of the unclaimed trust money process, you can read our process ‘Dealing With Unclaimed Trust Money’.

Wether you pass or fail, going forward this list serves as a reference to the types of documents that you’ll need to maintain. Perhaps you could implement this as a checklist in your office and do a self audit every quarter when your BAS is due.

What was your score? Were you aware of everything on the list or did some of the items take you by surprise? What steps do you take in your office to maintain trust compliance? I would love to hear your thoughts/comments.

~ 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 18 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.