It's trust account audit time! - Settlement industry bulletin issue 111
29 June 2023
It’s trust account audit time!
July is the perfect time to start preparing and referring trust account information to your auditor so the 2022-23 audit report can be completed by the 30 September 2023 due date.
Do I need to be audited?
The law requires all individuals, bodies corporate or firms (partnerships) that held current triennial certificates in the 2022-23 financial year to have their trust accounts audited by a qualified auditor.
Your trust account/s will need to be audited if for any period of time between 1 July 2022 and 30 June 2023:
- you, your company or partnership held a current triennial certificate; and
- your business held or received any monies in trust.
Who is responsible?
The agent is responsible for causing the trust accounts to be audited. This means the agent must provide the auditor with all relevant documents and information when required to do so by the auditor. This will allow the auditor to prepare the audit report on time.
It is then the responsibility of the auditor to provide the Commissioner for Consumer Protection with a report on the result of the audit by 30 September 2023.
If you fail to provide the auditor with all of the necessary materials when required to do so by the auditor, the Commissioner may consider that you to have failed to cause the audit of the accounts and you may be subject to enforcement action.
What if I didn't hold or receive monies in trust?
If you, your company or partnership did not hold or receive monies in trust at any time during the 2022-23 financial year, you can meet your audit obligations by completing and submitting a Declaration of no receipt of trust funds (declaration) in place of an audit report.
Deadline is in September
Your auditor must lodge the annual audit report or declaration for the financial year ending 30 June 2023 with the Commissioner by 5pm on 30 September 2023.
Agents and auditors are encouraged to submit audit reports and declarations via email to firstname.lastname@example.org.
An auditor can request extra time to lodge an audit report. The written request must outline the exceptional circumstances why extra time is needed, confirm the auditor has access to the trust account records, and state the date the completed report will be provided. The request must be approved by the Commissioner prior to the 30 September deadline.
If an audit report or statutory declaration is not received by the Commissioner by 30 September 2023 and no extension has been approved, the matter will be investigated and appropriate enforcement actions may be taken, including issuing infringement notices or even commencing prosecution action.
Reminders for agents
You should remember to:
- Disclose all trust accounts, including interest bearing trust accounts, to your auditor.
- Provide the auditor with all records relating to discrepancies in trust accounts, regardless of how the error occurred or whether we have already been notified.
- Ensure the address provided in any statutory declaration is your current address.
- Only submit a statutory declaration of no funds held if you did not hold or receive any money for or on behalf of others during the audit period.
Reminders for auditors
- Disclose all trust accounts, including interest bearing trust accounts and/or trust accounts closed during the audit year, in Annexure A with the proper titling as per the bank records.
- Ensure the correct titling of trust accounts as described in Regulation 6B of the Settlement Agents Regulations 1982.
- Ensure the entity name and business name are correct on all documents within the audit report, including statutory declarations.
- Check the agent’s business name is registered with Australian Securities and Investments Commission.
- Check the agent’s address is correct.
- Confirm witnesses to statutory declarations are authorised persons, with full name and qualification listed.
- Disclose all instances of discrepancies associated with trust accounts, including errors made by financial institutions or the agent even if the department has dealt with the matter.
- Make a note of any trust account matters for communication to the Commissioner in the statutory declaration, and attach a management letter detailing these matters - if a management letter is not required, please do not mention it in the cover letter.
- Have all parties complete and sign the Change of Auditor Request Form if there has been a change of auditor since the last audit, with the agent or auditor submitting the request by 31 August.
- Ensure the audit report is complete with no missing pages and include the statutory declarations by the agent and auditor.
Our publication, A guide to auditing trust accounts: Real estate agents, business agents and settlement agents and business settlement agents, contains more auditing information.
The Settlement agents’ trust account handbook contains information to help you understand your trust accounting obligations.
You can contact the audits team by email at email@example.com or by telephone on (08) 6552 9538 if you have any queries in relation to the audit process.
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