Trust accounts, supervision and business management
This domain tests trust accounting and the supervision systems that prevent client money from being misused. Questions often involve deposits, receipts, reconciliations, audits, and who is responsible for salespeople.
Core rules
- Client money, including deposits and rent held for others, must go into the agency's trust account. Issue a receipt, bank promptly, and record each transaction in a client ledger. Do not mix trust money with office money or use it for agency expenses.
- Reconcile trust accounts regularly, keep records for the required period, and have the account audited as required. Commission and expenses may be paid only as authorised by the agency agreement and applicable rules.
- A branch manager must supervise salespeople and maintain adequate systems, training, and oversight. Unlicensed staff must not supervise agency work. AML/CFT customer due diligence also applies to agency work.
Worked example
A buyer gives a salesperson a $10,000 deposit cheque. The salesperson must receipt it and bank it into the agency trust account, recording it against the buyer's ledger. The money cannot be used for advertising or office rent. If the sale fails, the agreement and instructions determine repayment; the agent must not simply keep it.
Traps
- Banking a deposit into the general office account.
- Holding cash without a receipt or delaying banking.
- Treating reconciliation as an annual task only.
- Letting an unlicensed personal assistant supervise salespeople.