The trust accounting requirements for real estate agents changed in Queensland on 1 December 2014 with the introduction of the Agents Financial Administration Act 2014 and associated Regulations (replacing the Queensland Property Agents and Motor Dealers Act 2000). Hoffman Kelly has now conducted a number of audits of trust accounts under the new legislation and have noticed some policy changes from the Office of Fair Trading in their approach to the audit reports we have submitted to them:
- There is a much greater focus on breaches that are reported. We have experienced telephone and email follow-ups by OFT staff and some clients have had phone or personal visits by OFT staff to discuss the breaches further;
- There is a focus on the ‘End of Month Reconciliation’ date being the last day of the month. While it has always been a requirement for reconciliations to be prepared at the last day of a calendar month immediately after that month finishes, we are aware that many agents with rent rolls have adopted a process of closing the month a few days before this date to enable owners to receive their money before the end of the month. In past years we have not seen this process objected to by the OFT despite it not being in accordance with the technical rules. This year however, it has become clear that the OFT does require this to be strictly adhered to and we expect this will therefore be a challenge to some agencies in terms of changing processes. For example, the October end of month close MUST be performed at the date of 31 October, after this date has passed (ie it could be done on 1 November).
- More information is being collected by the OFT as part of the audit reporting. Previously, as part of our audit report, we would send a copy of the bank reconciliation at the last day of the audit year. Currently, the OFT is requesting far more information than this and now also require lists of outstanding cheques and unpresented deposits, breakdowns of any adjustments and trial balances for all ledgers in addition to the basic reconciliation.
As well as focussing on licensees, we have also become aware that the Office of Fair Trading is also focussing on auditors of trust accounts to ensure they comply with all their professional responsibilities. This should be a positive step to ensuring that all auditors conduct their audits to the same high standards as Hoffman Kelly does. If you have any concerns about how the new approach may affect your agency and what you should do to make sure you do not attract unwanted attention, we recommend you contact your auditor to discuss any changes that you need to make as soon as possible.
Should you have any troubles completing your checklists, please don’t hesitate to contact our office on 07 3394 2311.