Trust accounts
What the exam tests
Trust accounting is a high-risk area. The exam tests what money must be banked, how it is recorded, reconciliation and audit, and the branch manager's oversight.
Core rules
Client money-such as deposits and rent held for a client-must be paid into a trust account with an authorised bank. It must not be mixed with the agency's operating money or used for business expenses. The licensee must keep records of receipts, payments, ledgers and reconciliations. A reconciliation of the trust account should be done at least monthly, and the account must be audited annually by an approved auditor. Withdrawals are limited to authorised payments such as the client's direction, commission when properly payable, and bank fees.
Worked example
A buyer pays a $10,000 deposit before the unconditional date. The branch manager must ensure it is receipted and banked into the trust account promptly, not into the agency's general account. If the sale falls over, the money is released only on a lawful basis-such as the sale agreement or a court order-not because the agent decides.
Traps
- Banking deposits into the office account 'temporarily'.
- Treating commission as available before it is earned.
- Failing to reconcile or to keep source documents.
- Assuming the accountant's audit replaces the branch manager's daily oversight.