Every year, Trust Account Audits across Australia uncover the same short list of issues.
Different Real Estate Agencies.
Different states.
Different Trust Accounting systems.
The findings are remarkably similar.
Our trusted auditing partner, Simeoni & Co, has spent decades auditing Real Estate Trust Accounts across Australia. Their experience reinforces something we’ve seen ourselves time and time again. Most compliance issues aren’t caused by complex legislation. They’re caused by everyday processes that slowly drift off course.
That’s good news.
If the problems are predictable, they’re preventable.
The three issues below appear regularly during Trust Account Audits. Fortunately, each one can usually be avoided with strong systems and consistent processes.
1. Trust Accounts Not Closed Within the Required Timeframes
When a Trust Account is no longer required, it must be closed in accordance with your state’s legislation.
Simple enough.
Except it often isn’t.
A property settles.
A management ends.
The client moves on.
The account balance reaches zero.
Then the Trust Account quietly stays open.
The problem is that an open Trust Account remains your responsibility.
It still needs to be reconciled.
It still appears in your Trust Accounting records.
It still forms part of your annual audit.
A dormant Trust Account isn’t harmless.
To an auditor, it’s unfinished business.
Why It Happens
Closing a Trust Account rarely feels urgent.
Once the funds are gone, attention shifts to the next settlement, the next landlord or the next tenant.
Eventually, everyone assumes someone else has already dealt with it.
How to Prevent It
Build Trust Account closure into your normal workflow.
Don’t rely on memory.
Good practice includes:
- Keeping a register of every Trust Account and its purpose.
- Reviewing inactive Trust Accounts monthly.
- Including account closure in your settlement or offboarding checklist.
- Confirming legislative requirements before leaving an account open.
Key Takeaway
A Trust Account with no purpose is still your responsibility.
Closing it promptly reduces unnecessary compliance risk.
2. Reconciliation Adjustments Left Unresolved
This one catches even experienced agencies.
A reconciliation identifies a small adjustment.
Perhaps it’s an unpresented payment.
Perhaps it’s a timing difference.
It gets noted.
You plan to investigate it later.
Then End of Month arrives.
The adjustment rolls forward.
Next month it rolls forward again.
Eventually it becomes “one of those old adjustments.”
Why It Matters
Most legitimate reconciliation differences resolve naturally within days or weeks.
When an adjustment remains unresolved for months, it usually points to something else.
We’ve seen adjustments eventually traced back to:
- Receipts allocated to the wrong ledger.
- Payments recorded incorrectly.
- Historical posting errors.
- Transactions duplicated in the Trust Accounting system.
- Ongoing process issues affecting every reconciliation.
The adjustment itself may only be a few dollars.
The underlying issue often isn’t.
How to Prevent It
Treat every adjustment as a question that needs an answer.
Not a number to be carried forward.
Good practice includes:
- Assigning ownership immediately.
- Setting investigation deadlines.
- Recording how each adjustment was resolved.
- Escalating items that remain unresolved across multiple months.
Key Takeaway
Small reconciliation adjustments rarely become smaller with time.
Investigate them early while the answer is still easy to find.
3. Cash Receipts Not Banked Within Legislative Timeframes
This audit finding appears surprisingly often.
Not because agencies deliberately delay banking.
Because real estate gets busy.
A receipt arrives late on Friday.
Someone is away.
The banking run gets missed.
Everything is fixed the following morning.
Unfortunately, Trust Accounting legislation focuses on what happened.
Not what was intended.
Client funds must be banked within the prescribed legislative timeframe.
That’s because the entire Trust Accounting framework relies on accurate, timely records.
Why It Matters
Late banking creates unnecessary compliance risk.
Even when the money is secure.
Even when the delay is only one day.
The records and the bank should accurately reflect each other at all times.
That’s the standard auditors expect.
How to Prevent It
Strong systems remove reliance on memory.
Consider:
- Establishing a documented daily banking routine.
- Training multiple team members to complete banking.
- Recording receipts immediately when received.
- Reviewing banking timeframes during internal compliance checks.
Key Takeaway
Good banking procedures aren’t about working harder.
They’re about removing opportunities for human error.
The Real Problem Usually Sits Underneath
Notice the pattern?
None of these findings are really about the individual mistake.
They’re about process.
A Trust Account left open.
A reconciliation adjustment left unresolved.
A banking run completed late.
Each one reflects how work flows through the agency.
That’s why these findings often appear together.
Agencies experiencing one issue frequently have another hiding underneath.
Not because people don’t care.
Because busy teams naturally prioritise urgent work over routine compliance.
Auditors understand this.
They’re rarely interested in one isolated mistake.
They’re looking for patterns.
A one-off issue may simply require an explanation.
A recurring issue suggests a process that isn’t working.
That’s an important difference.
Because fixing the transaction doesn’t always fix the system.
How End of Month Angels Helps
At End of Month Angels, we don’t simply identify Trust Accounting issues.
We investigate why they occurred.
That means:
- Resolving historical reconciliation discrepancies.
- Correcting underlying Trust Accounting processes.
- Strengthening day-to-day compliance procedures.
- Supporting Property Managers, Trust Accountants and Licensees.
- Helping your Real Estate Agency remain audit ready throughout the year.
Our goal isn’t simply to help you pass your annual Trust Account Audit.
It’s to make sure the same issues don’t quietly return six months later.
The Earlier You Find It, The Easier It Is
Every Trust Accounting issue follows the same pattern.
Caught early, most take minutes to resolve.
Left untouched, they become days of investigation.
Historical adjustments become harder to explain.
Dormant Trust Accounts become harder to justify.
Repeated banking delays become harder to defend.
The same principle applies to your annual audit.
A clean Trust Account allows an auditor to move efficiently.
One containing unresolved questions naturally requires further investigation.
That’s why prevention is always cheaper than correction.
Where Should You Start?
Before your next Trust Account Audit, ask yourself three questions.
- Do we have Trust Accounts that should already be closed?
- Are there reconciliation adjustments older than one month?
- Is every Trust Money receipt being banked within the required legislative timeframe?
If you’re uncertain about any of those answers, it’s worth investigating now rather than waiting for audit season.
Small issues are almost always easier to resolve before they become formal findings.
Frequently Asked Questions
What are the most common Trust Account Audit findings?
Common findings include Trust Accounts remaining open longer than required, unresolved reconciliation adjustments and Trust Money not being banked within legislative timeframes.
Why do reconciliation adjustments become audit issues?
Long-standing adjustments often indicate underlying Trust Accounting process failures or historical errors that require investigation.
Does a small reconciliation adjustment matter?
Yes.
Small adjustments frequently point to larger process issues.
Resolving them early prevents recurring compliance problems.
Why do auditors focus on processes instead of individual mistakes?
Because strong processes prevent mistakes from recurring.
Auditors are assessing whether your controls consistently protect Trust Money and support legislative compliance.
How can End of Month Angels help?
End of Month Angels specialises exclusively in Trust Accounting for Real Estate Agencies. We provide outsourced Trust Accounting, End of Month processing, historical reconciliation investigations, compliance reviews, holiday cover and practical support that keeps your agency audit ready all year round.
