By Chris Leggett, Audit Manager.
At Lee Green we have performed a large number of audits on South Australian land agent trust accounts over many years. During our time of performing these audits we have been asked a range of questions from land agents in respect to the operations of their trust account. We thought we would compile the most frequently asked questions we have been asked and provide you with our responses.
Please note the following information relates to South Australian land agent trust accounts. If you need assistance with a trust account in another state or territory, please contact us.
What do I need to do if I close my trust account?
If you decide to cease to carry on a business, you are required under regulation 24 of the Land Agents Regulations 2010 to have your trust account audited from the previous audit period (your licence period) to the date that your affairs are wound up. A copy of the auditor’s statement should be forwarded to Consumer and Business Services within 4 months of the winding up the Land Agents affairs unless an extension has been granted to you.
You must continue to follow and comply with the Land Agents Act 1994 and the Land Agents Regulations 2010 requirements until your trust account and the Land Agent affairs has been wound up.
What is the best accounting system to use for my trust account?
There are many good accounting programs in the market that are specific for land agent trust accounts. Although we cannot specifically recommend a particular program we do suggest the following when looking to purchase such a program:
- Ensure the accounting program is specific to Land Agent trust accounts and that the program complies with all the requirements of the Land Agents Act 1994 and the Land Agents Regulations 2010.
- Some accounting programs may be more specially tailored for your sales business but may not necessary be tailored for your rentals business. So ensure you purchase the right accounting program that is tailored to your business.
When in doubt, the Real Estate Institute of South Australia (REISA) may be able to assist you.
What should I do with dormant balances and unknown monies that I have in my trust account?
Dormant balances within a trust account are balances that have not moved within your trust account/trust ledger for more than 12 months. Similarly, unclaimed monies are those amounts that have either been received into the trust account and you are not aware of who the money relates to or payments to third parties/clients that you cannot disburse and have been held for more than 12 months.
In these situations, when you have exhausted all avenues, these monies should be forwarded to the Department of Treasury and Finance. The following link provides further information and procedures in sending unclaimed monies to the Department of Treasury and Finance:
What are the key areas auditors look at?
Some of the key areas that we look at during our audit are as follows (please note that this is not an exhaustive list):
- Auditors are required to ensure that the Land Agent has complied with all compliance requirements of the Land Agents Act 1994 and the Land Agents Regulations 2010.
- Trust account reconciliations to the bank, cashbooks and trust ledgers are being performed at the end of each month and performed on a timely basis and reviewing of any adjustments that have included in these reconciliations.
- Reviewing for any debit balances within the trust account itself and within the trust ledger accounts.
- Ensuring receipts have been recorded in chronological order and that they contain the relevant information/particulars as required by the Land Agents Regulations 2010.
- Ensuring all deposits and payments are made and recorded on a timely basis and recorded into the cashbooks as prescribed in the Land Agents Regulations 2010.
What are the requirements for lodgement to CBS?
In order to continue being a registered land agent, The Land Agents Regulations 2010 requires your trust account to be audited annually and an annual return to be lodged within two months after your registration/licence year end.
Consumer and Business Services has provided an Audit Checklist which provides the documents that are required to be lodged. The documents are:
- Declaration by Land Agent & Regulation 23 – which is required to be signed by either two directors, or only one to sign if you are the sole director.
- Declaration by Approved Auditor – to be signed by either a registered company auditor or a person that has been prescribed by the Land Agents Regulation 2010.
- A list of client names and the amounts held for each person (an account balance alone is not enough) as at the last day of your registration/licence year end.
- If there is a discrepancy between the trust ledger balances (a list of client names and amounts) and the trust account balance, you will need to provide a reconciliation statement as at the last day of your registration/licence year end.
The link to the audit checklist can be located below:
What are the requirements for reconciliations of my trust account?
Regulation 20 of the Land Agents Regulations 2010 requires the Land Agent to perform the following:
An agent must, at the end of each month, prepare and keep as part of the agent’s records:
- a statement reconciling the balance of the agent's cash books, or equivalent computer records, kept under regulation 18 with the balance of the agent's trust account; and
- a statement reconciling the balances of the ledgers comprised in the agent's trust ledger accounts with the balance of the agent's trust account.
With this, a Land Agent should ensure that the two reconciliations as stated above are performed at a minimum at the last day of each month. Please ensure that the closing balance recorded in your trust account bank statement at the end of each month is used to perform your reconciliations.
If you have any questions and would like to discuss further or if you require an audit of your trust account, please contact either David Charlesworth or Chris Leggett on (08) 8333 3666. They are always happy to assist and help wherever they can.
The information provided in this article is general in nature and does not take into account any person or entity's particular financial situation or needs. Please contact us for advice specific to your circumstances.
This information is current at the time of publication and further updates may have occurred since that date.