Most Real Estate Agencies know when their annual Trust Account audit is due. Ask about last month’s Trust Account reconciliation deadline, and when the work had to be completed and reviewed, and the answer is often less certain.
That matters because an annual audit cannot make a late monthly reconciliation on time. The auditor may be reviewing work done months earlier, including the dates on which reconciliations were prepared and checked.
For Property Managers, the practical question is: how much time do we have after month-end to finish the reconciliation? For Licensees and Principals, there is a second question: when must I review or verify it?
“As at month-end” is not the deadline
A monthly reconciliation shows the Trust Account position as at the last day of the month. That is the date the figures relate to. It does not necessarily mean every step can be left until the last day of the following month.
The rules differ between states and territories. They can also distinguish between preparing the reconciliation, compiling supporting records and having the responsible person verify the result.
For example:
- Queensland: A principal agent must complete the monthly Trust Account reconciliation within five business days after month-end.
- Western Australia: The monthly reconciliation is prepared as at month-end, with a 10-working-day timeframe applying to its review and certification.
- New South Wales: The cashbook must be balanced and reconciled at the end of each named month. A separate 21-day requirement applies to compiling specified monthly records. Treating “21 days” as the whole story misses the month-end obligation.
- Victoria: The monthly reconciliation relates to the end-of-month position, and the Principal Agent or Officer in Effective Control must verify the reconciliation statements within 14 days after month-end.
These examples show why a single Australia-wide deadline would be misleading. Check the current rules and regulator guidance for every state or territory in which your Agency operates, then put the relevant preparation and sign-off dates in your calendar.
Why a correct balance can still lead to a finding
A reconciliation does more than show that the bank, cashbook and ledgers agree. It also shows when the Agency did the work and who reviewed it.
Suppose the October Trust Account balances correctly, but the reconciliation sits untouched until late November. Correct figures do not establish that the Agency met its October process and timing obligations.
That is why “the money was all there” may not answer an auditor’s question. The auditor may agree about the balance and still ask why the reconciliation or required review happened late.
What usually causes the delay?
Most late reconciliations start with an ordinary operational problem:
The bank statement is hard to access. If only one person can download it, their absence can hold up the entire process. Confirm who has access and when the month-end statement becomes available.
Unidentified deposits have been left for month-end. Start tracing them when they appear. If an amount remains unidentified, record what has been checked and how it is being followed up. An unresolved item needs an explanation; it should not simply disappear into an adjustment.
The Trust Account relies on one person. Document the steps and train someone who can cover leave or illness. Month-end should not depend on one Property Manager’s calendar behaving itself.
The reconciliation is prepared but waiting for review. A completed report sitting in an inbox does not meet a separate verification deadline. Give the Licensee or Principal a scheduled review slot with enough time to investigate any questions.
Work backwards from the required date
Once you know the rules for your jurisdiction, set an internal Trust Account reconciliation deadline earlier than the statutory one. Then assign dates and owners to each step:
- Download the month-end bank statement.
- Complete and check the cashbook and ledger records.
- Investigate and document any differences or unidentified funds.
- Prepare and save the reconciliation and supporting reports.
- Have the required person review, verify or sign it within the applicable timeframe.
- Store the final records where they can be produced for the audit.
The buffer matters. A bank access problem or an unexpected discrepancy is much easier to deal with when the sign-off is booked two days before the deadline.
Pay particular attention to months affected by public holidays and planned leave. December, January and Easter are predictable. Put cover in place before everyone vanishes for a well-earned break.
Know both dates
Your annual audit date tells you when the year’s Trust Account records will be examined. Your monthly Trust Account reconciliation deadline tells you when those records must be prepared and reviewed.
Find the rules that apply to your Agency, record each month’s deadlines and make the Licensee’s review part of the month-end schedule. A reconciliation that balances is essential. A reconciliation completed and verified on time gives the Agency the record to prove it.
If your Agency needs help keeping its Trust Account reconciliations on schedule, End of Month Angels can assist with month-end Trust Accounting and reconciliation support.
