Auction Conduct, Accounting, and Trust Funds
Domain 4 tests conduct at the podium and the money trail after the hammer falls. Expect questions on fiduciary duty, fictitious bids, buyer deposits, trust accounts, settlement statements, and record retention.
Conduct and fiduciary duties
The auctioneer owes the seller loyalty and the bidders fair dealing. Announce material terms before bidding, control increments, recognize bids clearly, and resolve ties consistently. Never take a bid from the seller or an agent without disclosure; fictitious bids are improper. For online sales, post terms on the platform and keep bid logs.
Trust funds and accounting
Money held for a seller or buyer-deposits, hammer proceeds, buyer's premiums owed to others-is trust money. Keep it in a separate trust account, do not commingle it with operating funds, and do not spend it before the underlying transaction clears and settlement authorizes disbursement. Issue receipts, maintain a ledger by lot and consignor, reconcile the account, and preserve records under board rules. New Hampshire has no general sales tax, so do not add one unless a specific taxable item applies.
Worked example
Hammer price is $8,000; buyer's premium is 12%; seller commission is 15% of hammer. Buyer owes $8,960. Seller is credited $6,800 before expenses; the $1,200 premium is the auctioneer's compensation. The $8,960 deposit goes into trust; after the buyer's funds clear, pay the seller and move the premium to operating funds.
Traps that cost marks
Using trust money for payroll or rent; paying the seller before the buyer's check clears; treating the buyer's premium as seller money; failing to reconcile; and keeping no bidder or lot records.