The yearly audit is a must-do of every real estate agency. Your annual audit is up there on the yearly to-do list along with your staff performance reviews and the planning of your annual staff party.
Yet, your annual review may not cause as much excitement as your Christmas Party… although there could be beverages involved in the aftermath…
So let’s try and put your mind at ease a little.
What many do not realise is that your auditor will be auditing records for the previous financial year. In order to do this, they will not require an entire year’s worth of records (as that would not be fun for anybody). What they will request is generally a three-month sample. They will look at every transaction for that three-month period and draw an overall audit conclusion from the findings.
Not so scary now is it?
Unfortunately, we regularly see a lack of knowledge in this area which leads to failed audits and undue stress. Agencies and licensees still seem unaware of their responsibilities and requirements regarding auditing.
Our Top Three Audit WHAT THE! examples
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Using Excel for Managing Trust Accounts
We have seen agents breached for using excel spreadsheets for their trust account management as opposed to compliant software. Using software that is not compliant such as Xero, Quicken, Quickbooks and MYOB can result in a hefty $1,100 fine in NSW. So check your software is compliant to avoid this simple, yet costly error.
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Missing Audits Completely
Yes, we have had clients tell us they have not performed an audit for the last two years because they ‘didn’t know’. Even better, ‘What is an audit?’ We kid you not. We have highlighted how to blow your audit out of the water and what to expect come audit time. https://www.endofmonthangels.com.au/blow-audit-checklist-water/ Use this as a timely reminder that audits are required every year!
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Not reconciling trust account transactions for over a year
Just thinking about this makes us quiver. We have seen this actually occur and were told as explanation ‘don’t worry, it’s balanced.’ Sheeesshh! Not reconciling correctly is a sure-fire way to get you and your agency into major strife. We have highlighted our top 10 reconciliation errors https://www.endofmonthangels.com.au/top-10-reconciliation-errors-fix/ along with the top ways to fix them!
So Ace that Audit
So before you think about missing your next audit or leaving your reconciliations for a good year or two, we have compiled an Audit Checklist https://www.endofmonthangels.com.au/ace-trust-account-audit/ to get you through. Keep this handy list with you and check everything off to keep the auditor happy.
If you have experienced one of our Audit ‘WHAT THE’ situations, don’t despair. Take the knowledge, learn from it and move forward this coming year. And ace that audit.
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~ Jane Morgan is the Director of End of Month Angels, a consultancy firm specialising in Trust Accounting. Jane knows the legislative requirements of running a successful Real Estate office through her 19 years industry experience. Don’t trust just anyone with your trust accounting. Trust End of Month Angels and get back to what you do best – growing your business.