Choosing the Right Trust Account Auditor
Strap yourselves in for what is going to be an epic blog of epic proportions. Yet as we may joke about the dry nature of our audit topic this month, it is one to actually be taken quite seriously. Yes we are talking about the importance of using a qualified real estate trust account auditor to audit your trust accounts.
For some, using a real estate trust account auditor is par for course. For others, the temptation to use their tax accountant for their trust account audit is a way to save on some cash. Kill two birds with one stone so to speak. The problem is, no one wins.
Unfortunately, we have seen this happen one too many times, and the results are not worth the savings.
Why the Change to Audit Regulations?
Section 115 of the PSBA Act 2002 was amended back in 2013 in regards to who can audit your trust account. It was amended to include authorised audit companies and members of certain professional accounting bodies who hold a Public Certificate or Certificate of Public Practice. Whoa this opened up the floodgates far and wide! Why you ask?
One size does not fit all
When it comes to accountancy, one size does not fit all. We do not for one second discredit the value and expertise held by accountants (since I was one!). But we do advocate for the right person for the job. We often seek advice from our accountant on taxation and accounting advice such as taxation law, BAS and PAYG. Likewise our accountant utilises our knowledge for any real estate and trust accounting tips. We are experts in our field. This is the area we know like the back of our hand.
So, the question is, when it comes to general accountancy vs your real estate trust accounts – why engage anyone else except the expert in each?
Just like it is important for your accountant to be up-to-date with taxation law, It is important that your auditor is up-to-date with trust accounting legislation and your trust accounts are in line. Unless they are in the field and dealing with it on a daily basis, this is highly unlikely. Legislation knowledge needs to cover the following, just to name a few:
- Trust account receipt numbering
- Sales commissions and settlement
- Overdrawn trust accounts
- Trust account reconciliations
- Unclaimed trust money
The aftermath of cutting corners
Unfortunately, we have seen many agencies take what they see as the easiest route. Employing their accountant to oversee their real estate trust accounting audit. The result is red flags from the Department of Fair Trading. Not what you want to see.
The choice is yours
Ultimately it is the choice of the licensee to determine who conducts the audit of the trust account. To us it is a no-brainer. Employ the most qualified person to do the job. It will result in the job done correctly and will keep the Department of Fair Trading happy.
Now that is a win-win.
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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.