EPMEPM: Best Practice & Legislation

The Auditors are Coming!

Carol Riley, one of Australia’s most experienced trust accountants, outlines some simple steps that agencies can follow to ease the stress of audit time – whether it is a regularly scheduled annual audit by your agency’s own auditor – or a surprise audit from your State’s regulating body.

Carol Riley, one of Australia’s most experienced trust accountants, outlines some simple steps that agencies can follow to ease the stress of audit time – whether it is a regularly scheduled annual audit by your agency’s own auditor – or a surprise audit from your State’s regulating body.

Licensing, Training and Risk Management

Each State in Australia currently has different requirements for Licensing, although a National Occupational Licensing System (NOLS) is currently underway and expected to commence for property agents in July 2012. Refer to www.nola.gov.au for more information.

For now, you should refer to your State’s legislation for details; the following is a general guide.

  • Most states require the licensee to have their name and other details displayed at their registered office, and at branch offices the name of the licensee or branch manager for that office.
  • The licensee’s individual licence and where applicable the corporations licence are generally required to be on display.
  • Ensure all employees are properly licensed in your State – either as a fully licensed real estate agent or as an agents representative or similar, and where applicable that the State’s body has been notified, and a register of employees kept.
  • Employees must be properly supervised.
  • Employees must receive adequate training, and in some states require annual CPD training.It is advisable to maintain a register of all training provided.
  • Each agency should maintain a policy and procedure manual, and all employees should know and understand them.
  • Every agency is required to have a Privacy Policy. The Privacy Policy should be available on your agencies website if you have one, and in most states should be on display at every OFI.

Trust Account

Many agencies operate a separate sales trust account, while others may use their rental trust account for sales transactions. Legislation differs slightly from State to State, the following checklist covers the general basics that apply.

Your State’s regulating body may require notification that you have opened (or closed) a trust account. Also check that the wording of your trust account name complies with requirements, for example, you may need to include the words Trust Account.You must appoint an approved auditor, and in most State’s notify your State’s regulating body.Each state has specified audit periods and dates that audit reports must be lodged. Ensure you are aware of your State’s requirements and have your audit booked well in advance.Make sure that both your manual receipts and those created by your trust accounting software comply with the legislation in your particular State.

Although each State differs, as a general rule, the basics for receipts include:-

  • receipt number;
  • name of your Agency’s business including ABN/ACN;
  • the words ‘trust account receipt’;
  • date of the receipt and, if different, date the money was received
  • amount received
  • form in which money was received e.g. cash/cheque/EFT;
  • name of the person from whom the money was received
  • name of the client for whom the money was received and a reference e.g. property or file code
  • purpose for which the money was received
  • name of the person who made out the receipt.

Monthly Checklist

It is advisable each month for someone in the departmentcheck some of the fundamental items that an auditor would review.


A receipt in the required format must be issued immediately.

All monies relating to Sales, whether they are Purchasers deposits or Vendors pre-paid advertising, must be banked into a Trust Account before the close of business the following day


Properly completed, signed, validauthoritiesmust be held.

Monies can only be drawn where authorised. This includes having a correctly completed, signed and current authority on file, written authorisation for marketing and any other expenses, proof of settlement etc.Make sure your clients are sent an invoice or bill for costs incurred, and that a settlement statement is provided.

All payment should be made by dual authority. Never allow one individual to hold two passwords to banking software for electronic transfer of files.The Licensee should be one signatory to all trust account cheques issued.


End of Month Reports must be produced and kept for review. Much can be learned from the End of Month reports – don’t simply sign the report, comforted by seeing that the numbers on the reports add up! Check that the reports supporting the final Bank Reconciliation are all produced, and that the balances on those reports match to the Bank Reconciliation.Check that all the reports required under your State’s legislation have been produced.Although each State differs, as a general rule, the basics for documents required for End of Month Receipts include:

  • copies of all receipts;
  • copies of all trust deposit records;
  • a separate trust ledger account for each client (or property) with separate entries for each transaction recorded as soon as practicable after the transaction;
  • the trust ledger account for each client (or property) must include client’s name, address and sufficient details for identification;
  • a trust account receipts cash book recording all receipts;
  • a trust account payments cash book recording all payments ;
  • records of all trust money payments e.g. paper copy records of all cheques issued and all EFT transactions;
  • a trust account transfer journal;
  • trust account reconciliation statements;
  • a register of controlled money, if any is received.

End of Month reports and duplicate receipts maybe retained in “soft” copy in some States. Where this is possible, it can save a mountain of printed paper and subsequent storage problems.In some states, the final bank reconciliation must be signed by the Licensee within a specified time period.


Keep a register of all sales files, and if possible, where the files are located or who has control of the file. Sales files should be locked away every night where possible for privacy.Sales files should be meticulously maintained and contain all the information required.Each sales file should have a checklist of required documents and procedures.

Again, although each State has different requirements, your checklist would include the following (NB: – your checklist should be extensive and cover as many items as necessary, this is a short guide only):

  • Properly completed, signed, validauthority;
  • Comparable market evidence to support estimate provided;
  • Signed marketing/advertising program/schedule;
  • Copies of all advertising to demonstrate accuracy;
  • Contract and supporting documents required in your State;
  • Copies of correspondence;
  • Confirm proper disclosures have been made;
  • Confirm warning notices have been provided;

Audit reports

Once your audit is complete, it is tempting to just breathe a sigh of relief and file away that report! However, audit reports can contain information vital to your business, including control gaps and areas of potential risk. Read your auditors annual report to note any exceptions that are being reported. If any exceptions are reported, review your internal processes, proceduresand checklists to ensure that where possible they are modified to prevent future exceptions.Your auditors may also provide suggestions for how you can improve your operations.

Sample Checklist

  • Licensing, Training and Risk Management
  • Licensee / Branch Managers individual and corporate details displayed at each office
  • Employee register maintained
  • Employee’s are properly licensed or representatives
  • Employee’s are properly supervised
  • Employee’s receive adequate training and a training register is maintained
  • Policy and Procedure Manual is maintained and employees know and understand
  • Privacy Policy is available on website and at every OFI

Trust Account

  • State body notified of opening/closing trust account
  • Approved auditor appointed and State body notified
  • Audit date booked and diarised
  • Manual and computer receipts contain required fields, wording and numbering

Monthly Checklist

  • Receipts issued immediately
  • Monies receipted and banked into the trust account within required time frame
  • Correctly completed, signed current authorities held on file
  • Authorisation held for monies drawn
  • Dual authorisation for files


  • Required end of month reports produced
  • Hard or soft copies of all end of month reports kept
  • Final monthly bank reconciliation signed by the Licensee


  • Sales file register kept
  • Sales files maintained
  • Sales file checklist completed for each file


  • Completed within the required time frame
  • Copy of the report lodged with your State body
  • Monthly report reviewed and actions taken

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