Just a little more information about Trust Accounts

Rosy Sullivan

At this time of year we seem to be on financial information overload!  Adding to the pressures of the normal end of financial year business, we in real estate must look forward to the Annual Trust Account Audits. To make life a little more interesting this year, there have been amendments to the Property, Stock and Business Agents Act 2002, which are to commence from 1 July.

Currently the rules for your Trust Account Audits dictate that you must lodge your audit with Fair Trading regardless of whether the audit was qualified or not. Furthermore, it states that if you are an agent who does not deal with trust money you are required to submit a declaration to confirm that you do not deal with a trust account.

The amended laws will mean the following changes to your auditing for this financial year, 2012/13. They  include:

  • While all licensees who held or received trust money during their audit year will still need to have their trust accounts audited, only those audits which are qualified by the auditor, are required to be lodged by the auditor and licensee with Fair Trading.
  • The term 'qualified' is now defined in the amendments to the Act.
  • The list of persons who are qualified to audit trust accounts under the Act is extended to include authorised audit companies, members of a Professional Accounting Body as defined under the ASIC Regulation 2001 (i.e. CPA Australia, Institute of Chartered Accountants in Australia and National Institute of Accountants) holding a Public Practising Certificate with one or more of those bodies.
  • A requirement on the auditor to forward a copy of the trust account audit (if qualified) to Fair Trading within 14 days after providing the report to the licensee.  A maximum penalty of 50 penalty units ($5,500) is provided for a breach of this requirement.
  • Licensees who did not hold or receive trust money during the audit year will no longer lodge a statutory declaration to that effect.  Instead, licensees will be required to note whether or not they did so when they next re-apply for their licence.
  • Licensees are now required to hold a copy of their trust account audit (whether qualified or not) at their registered place of business, for at least 3 years, and make it available to Fair Trading inspectors for examination if required.

    So, I hear you ask - What difference does this make to your normal audit process and what does it all mean?

    A qualified audit essentially means an audit where a discrepancy has arisen or some kind of problem has been found with your trust account.  If your trust account is not “qualified” then it does not need to be lodged with Fair Trading.  Remember however, that you need to keep a copy of  all audits, qualified or not for a minimum of three years in case of a request by NSW Fair Trading to view the audit records. It also means that if you do not deal with a trust account you now advise NSW Fair Trading of this with your annual license renewal rather than in September of each year.

    Another of the positive amendments is the removal of responsibility for Unclaimed Trust Money under the Property, Stock and Business Agents Act and Fair Trading.  Responsibility now lies with the NSW Office of State Revenue (OSR).    Please note that as licensees have already fulfilled their responsibilities in relation to the handling of unclaimed trust money for 2012, the new provisions for handling unclaimed trust money will not commence until 1 July 2014. 

    The differences are not ground breaking, however their aim is to help reduce some of the red tape for those of us within the industry.