The Friday deposit and the cash thank-you
Aroha is a newly licensed salesperson at a two-office agency. On Friday at 5.30pm a buyer gives her a $30,000 deposit cheque for a signed sale and purchase agreement. The cheque is payable to the agency. Aroha puts it in her desk drawer and leaves for the weekend. On Monday at 9am she hands it to the office administrator. The agency's trust account was last reconciled six weeks ago; the branch manager is on annual leave and the administrator has been signing cheques alone. A grateful vendor also gives Aroha $300 cash 'for your trouble' after an open home. Aroha is unsure whether to keep the cash, bank the cheque, or tell anyone. The agency's written supervision policy requires a manager to review trust receipts weekly.
1. What should Aroha do with the $30,000 cheque and the $300 cash?
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Aroha should not have left the cheque in her desk drawer. The correct steps are:
- Issue a receipt immediately for the $30,000, showing date, payer, property, and that it is held in trust.
- Bank the cheque into the agency's trust account promptly - on the next banking day, not after the weekend. The cheque should be made payable to the agency's trust account, not to Aroha personally.
- Record the receipt in the trust ledger for the property and keep the bank deposit slip.
- Tell the branch manager or supervisor as soon as possible.
The $300 cash from the vendor is a separate issue. A cash gift to a salesperson can create a conflict and must be disclosed under the agency's policy and the Code. Aroha should decline it or, if it cannot be returned, disclose it in writing to her manager. She must not treat it as personal petrol money.
2. What trust account and supervision failures does the scenario reveal?
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The trust account failures are significant:
- No prompt banking. Trust money must be banked promptly and not held in a desk drawer. The delay creates a risk of loss and is a breach of trust account rules.
- Reconciliation overdue. The trust account should be reconciled regularly, normally monthly. Six weeks without reconciliation is a control failure.
- Cheques signed by one person. The administrator signing cheques alone while the manager is away weakens dual control. The agency's procedures should require two authorised signatories or manager review.
- Supervision (Rule 15). The branch manager remains responsible for supervision even on leave. A named supervisor should be delegated.
Aroha should report the late banking and the gift to the manager, and the agency should complete the reconciliation immediately and document the fix.
3. What remediation should the agency put in place, and what are the risks if it does not?
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Remediation:
- Bank the cheque and issue the receipt now; do not backdate records.
- Complete the trust reconciliation and have it reviewed by a director or delegated supervisor.
- Review cheque signatories and ensure dual authorisation.
- Record the $300 gift and return it to the vendor or disclose it; do not keep it.
- Report the matter through the agency's compliance process; a serious trust breach may be reportable to the REAA.
- Train Aroha on trust receipts, banking, and gifts, and document the training.
The exam point is that trust money is not the salesperson's money, and supervision is not suspended by annual leave. The agency must be able to show a clear audit trail from receipt to bank to ledger.