We are officially in the lead up to the End of Financial Year (drumroll). This trust accounting EOFY leadup has been unlike any other we have seen in our lifetime. With the impact of COVID still too fresh, throwing EOFY into the mix might be enough to tip some over the edge. So we want to step in and help you make the process as seamless as can be, as well as avoiding any audit breaches post EOFY.
It all comes down to your processes and following our 4 step golden EOFY rule.
How to Survive Your Trust Accounting EOFY
EOFY Statement & Ledger Previews
A statement preview helps us to identify mistakes early such as missing addresses and poorly allocated revenues and expenses. Run a preview statement prior to running any final reports. You can fast-track this process next financial year by running a statement preview on an ongoing monthly basis. A ledger preview will also help to clear out any unidentified deposits and unallocated income. Again, you can fast track this process next year by performing ongoing monthly previews and not letting funds accumulate.
A cluttered account can indicate a certain level of laziness to your auditor Avoid this by conducting a solid decluttering of your trust account. Ensure to clear all adjustments by June 30 and allocate them correctly, because remember, trust accounting adjustments are just plain bad practice! Aim for a nil tenant balance by allocating rent/invoices/refunds to vacated tenants. Allocate any unidentified deposits and lodge any deposits that cannot be identified to State Revenue. Archive any old properties and records to ensure your database is clean and up-to-date and finally, lodge any outstanding bonds to the bond board.
Hopefully, by now you are either reconciling on a daily or monthly basis. Leaving your reconciliation until EOFY is a sure-fire (and completely unnecessary) way to increase your stress levels. Clear the clutter out from your reconciliation – anything that is older than 3 months. Find the cause as to why they have not been reconciled and fix as appropriate.
As always, we cannot stress this enough. Regardless that Section 22 (10) of the PSBA Regulations 2014 tells us that we should backup at least once per month, we believe this is not enough. Backup daily! The thought of losing all your data come EOFY morning is just too much to bear. We have seen this happen one too many times to count. Follow our 3-2-1 backup rule to avoid this catastrophe.
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 23 years’ industry experience. Don’t trust just anyone with your trust accounting. Book an appointment with an End of Month Angel today.