Trust account audit due early 2017 - Real estate bulletin issue 131 (January 2017)
3 January 2017
Don’t leave it to the last minute to organise your annual trust account audit.
By law all real estate agents (agents) who have held or received monies in trust are required to submit an annual audit report.
The annual audit report for the year ending 31 December 2016 must be submitted to the Commissioner for Consumer Protection (the Commissioner) by 5pm on 31 March 2017.
Agents who have not held or received monies in trust during the 2016 year can submit a statutory declaration in lieu of an audit report.
Agents who have held the roles of person in bona fide control, branch manager, licensed director, partner or licensed partner for another licensed trading entity are not required to submit an audit or statutory declaration for their individual licence.
Penalties may apply if the audit report or statutory declaration (as is applicable) is not provided to the Commissioner by the above due date.
Agents and auditors are encouraged to submit their audit reports and statutory declarations via email.
You are not required to submit a hard copy of your audit report or statutory declaration if you have submitted it electronically.
Alternatively the audit report or statutory declaration can be posted to Locked Bag 14 Cloisters Square Perth 6850.
Information regarding the requirements for the audit report or statutory declaration can be found in the online publication A guide to auditing real estate and business agents’ trust accounts.
Change of Auditor
Where there is a change of auditor, please ensure the Change of Auditor Request form is completed and signed by the agent, the new auditor and the outgoing auditor.
Please note the Commissioner is unable to accept audit reports where the auditor has changed but no Change of Auditor Request form has been received and approved.
Trust Account Basics
When do I need to open and maintain a trust account?
Real estate agents who hold or receive monies on behalf of others, in relation to real estate transactions, are required to open and maintain one or more trust accounts with authorised financial institutions.
Deposits on sales, rent, repair and maintenance funds and pre-paid advertising are examples of trust money. All trust money must be kept in a trust account which is separate from the agent’s general business money and a separate set of accounting records must be kept for each trust account.
Remember trust account money belongs to other people. The removal of money from the trust account for a reason other than one that is lawful and appropriate, is a criminal offence.
When do I need to notify Consumer Protection of changes to a trust account?
The agent must notify the Commissioner in writing within five working days whenever a trust account is opened, closed or amended. The relevant forms for all these actions are available from the page Auditing real estate agents.
The requirement to notify the Commissioner excludes interest bearing trust accounts as requested by a client. However these accounts are still required to be reconciled at the end of each month and audited as part of the annual audit.
How do I title the trust account?
Agents must include certain information in the titling of the trust account. This information is available in the online publication Real Estate and Business Agents’ Trust Account Handbook.
If you have any questions, or require further information please visit Auditors of real estate agents forms and publications or contact the audits team by email or by telephone on (08) 6251 2721.
Agencies considering using any alternative arrangements to manage trust funds should think very carefully before proceeding. The Department recently became aware of a company offering “a trust account service” for real estate agents and settlement agents.
In Western Australia the responsibility of the security of trust money ultimately falls on agents. Using an outside service does not relieve agents of their responsibility.
The Department is concerned about the use of services claiming to manage trust accounts for real estate and/or settlement agents may result in breaches of the legislation governing those industries and/or their respective codes of conduct.