Trust Account Audit
Under the Property Stock and Business Agents Act 2002, licensees’ records in relation to the handling of trust money must be audited.
This article explains who is affected, who can perform an audit, and other matters to help what they need to do to meet compliance obligations.
Who is required to have their trust accounts audited?
The following people must have their trust accounts audited if they received or held trust money during the financial year:
- a licensee (corporation or individual)
- a former licensee (corporation or individual), or
- a personal representative of a licensee.
In most cases, it is the licensed corporation that receives and is responsible for trust funds. Therefore, a trust account audit must be effectuated by the licensed corporation.
However, if an individual licensee receives and is responsible for trust money, then a trust account audit must be effectuated by the individual licensee.
When must the audit be submitted?
All audits must be submitted to the Secretary within 3 months after the end of the audit period and no later than 30 September.
Please note that all previously approved alternate audit periods are now rescinded.
If a trust account audit is not submitted by the due date, licensees could be disqualified from holding a licence and possibly prevented from renewing a licence.
Who is required to submit an audit by the due date?
All trust account audits must be completed and submitted online by the auditor through the Auditor’s Report Online portal.
HOWEVER: The Act makes it quite clear that it is the licensee’s responsibility to ensure the report is lodged by the due date.
Before engaging an auditor, inform them that the report must be lodged by 30 September and confirm that the auditor will be able to complete the report in time for you to lodge it by the due date. Give the auditor access to all records and documents relating to money held in a trust account for the audit period, as soon as possible after the end of the audit period.
Monitor the progress of your report with the auditor on a regular basis. Do not just leave the report with the auditor and forget about it. If your auditor cannot complete the report within the agreed timeframe due to some unforeseen circumstance preventing on time lodgement, you should immediately engage another auditor.
Who can conduct the audit?
Auditors must be registered with the Australian Securities and Investments Commission (ASIC) or be qualified under section 115 of the Property Stock and Business Agents Act 2002.
Registered audit companies, authorised company auditors and members of a Professional Accounting Body holding a Public Practising Certificate or Certificate of Public Practice can conduct the audit.
A Professional Accounting Body is defined under the Australian Securities and Investments Commission Act 2001, and includes CPA Australia, the Institute of Chartered Accountants of Australia and the National Institute of Accountants.
Who cannot conduct the audit?
Within the last 2 years of the audit period, an auditor must not have been employed by, nor be a partner of, the person whose records or documents are to be audited.
An auditor must not be a licensee, or a shareholder in a corporation that is a licensee with less than 20 shareholders.
You can check that an auditor is registered by searching for their details on the ASIC website.
Can the lodgement deadline be extended?
All auditor’s reports are required to be lodged by the due date. The deadline will only be extended in exceptional circumstances which existed over a period of time and can be supported by evidence.
Reasons such as unaware of the requirement to lodge, forgetting to provide access to the auditor, allowing insufficient time for the auditor to complete the report, forgetting to lodge the report, the auditor was too busy to get it done in time or the auditor forgot to lodge the report, are not acceptable.
What happens if the auditor’s report is not lodged by the due date?
If an auditor’s report is not lodged by the due date or not lodged at all, and you do not have an acceptable reason, Fair Trading will contact you and take action based on your circumstances.
Failure to lodge by the due date makes an individual or corporation a disqualified person under the Act and liable to disciplinary action.
You could be issued a fine, and be unable to renew your licence until you lodge!
So in short, if you received or held money in trust at any time during the audit period, you must engage an authorised auditor to complete the audit and submit the report before the deadline.
The team at Business Wise can perform your audit and mandatory unannounced inspections in accordance with the Act, as part of an upfront Fixed Price Agreement.
Why not take advantage of a free 30 minute consultation with a member of our team, and you can also contact Fair Trading on 13 74 68 for more information.