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Real Estate Agent and Business Broker’s Trust Account Audits

Amendments to the Property, Stock and Business Agents Act 2002 commenced from 1 July 2013. These amendments will change the way licences fulfil their responsibilities in relation to the auditing of trust accounts.

Requirements prior to 1 July 2013

Prior to 1 July 2013, licensees who have held or received trust money during their audit year are required to have their trust accounts audited and lodge the audit returns with NSW Fair Trading whether the audit was qualified or not.

Licensees who did not hold or receive any money for or on behalf of any person during the audit period are required to lodge a statutory declaration with Fair Trading to that effect.

New laws as of 1 July 2013

As mentioned above, the amendments to the Property, Stock and Business Agents Act 2002 commenced from 1 July 2013.Commencing from the 2012/2013 audit year, the amendments provide a new framework for how licensees handle their trust account auditing responsibilities under the Act.

In the case that your trust accounts were inactive for the audit period and you will be filing a statutory declaration, then an auditor is not required and you can complete the form before a Justice of the Peace or a solicitor, sign it, have it witnessed and post the form to Fair Trading.

The major changes include:

  • While all licensees who have held or received trust money during their audit year will still need to have their trust accounts audited, only those audits which are qualified by the auditor are required to be lodged by the auditor with Fair Trading.

What is a qualified report?

The amendments define ‘qualified’ as: a discovery by the auditor of a breach of the Act or Regulations, any discrepancy relating to the trust account or a failure to keep records in a manner that enables them to be properly audited.

  • Licensees who did not hold or receive trust money during the audit year will no longer lodge a statutory declaration to that effect. In its place, licensees will be required to note whether or not they did so when they next re-apply for their licence.
  • Licensees are now required to hold a copy of their trust account audit (whether qualified or not) at their registered place of business, for at least 3 years, and make it available to Fair Trading inspectors for examination, if required.

Who can audit the trust account?

The list of persons who are qualified to audit trust accounts under the Act is extended to include authorised audit companies, members of a Professional Accounting Body as defined under ASIC Regulations 2001 (CPA Australia, Institute of Chartered Accountants in Australia and National Institute of Chartered Accountants) holding a Public Practising Certificate with one or more of those bodies.

Michael Quinn, director of The Quinn Group is a Certified auditor by the Australian Institute of Chartered Accountants. The Quinn Group’s accountants can carry out real estate trust account audits and assist licensees in ensuring their trust accounts meet Fair Trading regulations.

The auditor is required to forward a copy of the trust account audit, if qualified to Fair Trading within 14 days after providing the report to the licensee. A maximum penalty of 50 penalty units or $5,500 is provided for a breach of this requirement.

As a licensee, if you have held or received trust money during the audit year of 2012/2013, the account will need to be audited. Our dedicated team of registered auditors can complete the trust account audit and lodge the report (if required) with Fair Trading. To speak with our auditors, complete and submit the express enquiry form or call us on +61 2 9223 9166 to arrange an appointment.

© The Quinn Group Australia Pty Ltd ABN 86 078 526 860

The Quinn Group operates Quinn Consultants, Quinn Lawyers, Quinn Financial Planning and Quinn Financial Solutions. The Quinn Group provides related information in regard to legal, accounting and financial planning issues. Liability limited by a scheme approved under Professional Standards Legislation* *other than for the acts or omissions of financial services licensees.