Trust account audits

As a real estate agent, you must audit your trust accounts once a year. Otherwise you can't renew your license from Consumers Affairs Victoria.

The objective of a trust account is to keep track of all the payments and transactions of an agency and flexible settlement of the business. To understand the trust accounts, agents must know the basic use and regulations of trust money and accounts in Victoria to get the most out of their accounting.

When agents receive money from their clients, they need to deposit it into a trust account as per Australian law.

You have to open one, or multiple accounts (depending on the company's requirement) to keep rent, sales commission, and the fee for maintenance and advertising. The law of Consumers Affairs has stated that it may cause a penalty if you don't keep the trust money in the trust account.

The earnings apart from trust money will be kept in a general account and not the trust account. When opening the trust account the name of the account must match the name of the registered agency or the name under which the license is issued. You have to register on myCAV, and your account will be opened within 14 days. This trust account should be opened with an authorised organisation such as a bank, credit union, or building society.

Keeping the money in a real estate trust account involves strict timeframes. Once an agent receives the money, they must deposit it into the trust account by the next business day. In case the real estate company is far from the financial institution, they can submit it on the third business day. Receipts are issued for the money so that agents can keep track of payments deposited into their accounts.

Once the money is deposited to a trust account, it is then paid to the owner of that money - landlord or seller. While withdrawing, the commission of the agent or agency is paid when transferring the remaining payment to the entitled person in the form of electronic funds or cheque.

It is not unknown that you need accurate accounting of your trust money or it will result in unwanted outcomes such as penalty or cancellation of license. It is, therefore, crucial to keep the complete details. While accounting your trust money, you need a record of the money, i.e., who is entitled the money, what are the dates of transactions, and also the details of all transactions. It is required to update the information of every transaction after the next working day.

Additionally, an agency needs to keep the records for at least seven years. You have to take the backups on a weekly or monthly basis. In case you need any help with the accounts, your trust account auditor will help you with the details. Consult the best trust account auditors to be aware of all the requirements.