Trust account audit + ASIC / state regulator submission
Holders of client trust accounts (real estate, legal, conveyancing) must lodge annual audited accounts.
Who must comply
Licensed estate agents and agency corporations that operate a trust account (and, under the Conveyancers Act 2006 (Vic), Victorian licensed conveyancers). In Victoria an approved auditor must be a practising public accountant who is a member of CPA Australia, the Institute of Public Accountants or the Institute of Chartered Accountants in Australia, and must not be an estate agent, an agent's employee or partner (or have been one in the last two years), or an officer of an estate agency corporation.
What triggers it
A trust account holding or managing trust money at any time during the audit period. A Victorian account that held no trust money all year needs no audit, but the agent must confirm that in myCAV. Ceasing to operate triggers a final audit.
When due
Victoria: audit of the 1 July-30 June period completed within 3 months after 30 June (a varied audit date can be approved, no more than 12 months after the previous report); audit report lodged within 10 business days of receipt. On closure, notify CAV within 28 days and have the trust accounts audited within three months.
Evidence required
Trust account records kept to allow a proper and convenient audit; a certified statement of trust money held on the last day of the audit period; the signed auditor's report on the approved form, retained for seven years and producible on demand; myCAV lodgement confirmation; nil-activity confirmation where no trust money was held.
Max penalty
In Victoria, failing to lodge the audit report within 10 business days is an offence with a penalty of up to 120 penalty units, and the Business Licensing Authority may suspend the agent's licence for failing to have trust accounts audited or to lodge the report
Who must comply with this? The applicability test by industry, business structure and size.
Summary
Trust account audits are a state-law obligation: each state sets its own audit period, auditor rules and lodgement process for agents who hold money on trust for clients. Victoria is the worked example here. A Victorian estate agent must have every trust account that held trust money during the year audited for the period 1 July to 30 June, within 3 months after 30 June, by an approved auditor using the audit report form approved by the Director of Consumer Affairs Victoria (CAV). The agent must keep the accounts so they can be properly audited, give the auditor all records and information reasonably required, and lodge a copy of the audit report with CAV through myCAV within 10 business days of receiving it. Auditors must report dishonesty, legal breaches or trust money deficiencies to CAV directly. Victorian licensed conveyancers are NOT audited under the Estate Agents Act: their trust accounts are audited under the Conveyancers Act 2006 (Vic) — also an annual audit by an approved auditor, with the Independent Assurance Report lodged with CAV via myCAV within 10 business days of receipt (CAV 'Auditing trust accounts' for conveyancers). Lawyers' trust accounts are governed by the legal profession legislation instead (in Victoria, the Legal Profession Uniform Law). In NSW, trust accounts kept by property agents are overseen by NSW Fair Trading under that state's own rules.
Enforced by
Industries
Topics
Related
- CWLTHLodge an annual SMSF audit before lodging the SMSF Annual ReturnSelf-managed super funds must be audited by an ASIC-registered auditor each year.
- CWLTHComply with NDIS quality auditor cycle for registered providersRegistered NDIS providers must pass NDIS Quality auditor cycle (verification + certification audits).
- CWLTHMaintain auditor / financial reporting (Chapter 2M)Large proprietary, public and disclosing entities must prepare and lodge audited financial reports.
- NSWNSW + VIC solicitor trust account requirementsSolicitors holding client trust money face strict trust account + audit requirements.
Reading
Frequently asked questions
- Who must comply with Trust account audit + ASIC / state regulator submission?
- Licensed estate agents and agency corporations that operate a trust account (and, under the Conveyancers Act 2006 (Vic), Victorian licensed conveyancers). In Victoria an approved auditor must be a practising public accountant who is a member of CPA Australia, the Institute of Public Accountants or the Institute of Chartered Accountants in Australia, and must not be an estate agent, an agent's employee or partner (or have been one in the last two years), or an officer of an estate agency corporation.
- What triggers Trust account audit + ASIC / state regulator submission?
- A trust account holding or managing trust money at any time during the audit period. A Victorian account that held no trust money all year needs no audit, but the agent must confirm that in myCAV. Ceasing to operate triggers a final audit.
- When is Trust account audit + ASIC / state regulator submission due?
- Victoria: audit of the 1 July-30 June period completed within 3 months after 30 June (a varied audit date can be approved, no more than 12 months after the previous report); audit report lodged within 10 business days of receipt. On closure, notify CAV within 28 days and have the trust accounts audited within three months.
- What is the maximum penalty for Trust account audit + ASIC / state regulator submission?
- In Victoria, failing to lodge the audit report within 10 business days is an offence with a penalty of up to 120 penalty units, and the Business Licensing Authority may suspend the agent's licence for failing to have trust accounts audited or to lodge the report
- What evidence is required for Trust account audit + ASIC / state regulator submission?
- Trust account records kept to allow a proper and convenient audit; a certified statement of trust money held on the last day of the audit period; the signed auditor's report on the approved form, retained for seven years and producible on demand; myCAV lodgement confirmation; nil-activity confirmation where no trust money was held.
Source: https://www.consumer.vic.gov.au/licensing-and-registration/estate-agents/running-your-business/trust-accounts/auditing-trust-accounts. Rules Mate is not a law firm. Always verify against the live regulator source before acting.