Generally, like life, Trust Accounting follows a set of key principles. Like starting school for instance.

  1. Wear your uniform.
  2. Tie your shoes.
  3. Don’t eat your fellow classmates’ lunch.

Trust Accounting is the same.

It follows a set of key principles to ensure everyone stays in their lane and does not get a detention (aka an audit breach).

Sheesh the similarities are so accurate!

Who would have thought Trust Accounting was just like being back in 5th grade?

So back to the principles.

Here’s our…

Top 6 principles to stay in your Trust Accounting lane

  1. Keeping funds separate

    Like keeping your sandwich separate from your fruit to avoid leakage – funds must be segregated from personal or business accounts to avoid mixing them. No one likes soggy sandwiches.

  2. Detailed record-keeping

    Like getting marks for your working out in maths, record every transaction in detail to ensure transparency and accurate tracking of funds.

  3. Regular reconciliation

    Like getting your diary signed every week by your parents, Trust Accounts should be regularly reconciled to identify and rectify any discrepancies.

  4. Avoid recording live transactions

    It is crucial to avoid recording live transactions directly into the Trust Account for several reasons.

    Firstly, reducing errors. Live transactions are prone to human and technical errors. Recording them directly into the Trust Account can lead to inaccuracies, violating regulations and affecting client interests.

    Secondly, you will never know which statement the software matches as live transactions don’t show in the same order on the bank statement the next day, so your closing balance will be incorrect.

    So, like avoiding skipping ahead to extension work – make your life easy and receipt only for the previous business day.

  5. Reconcile weekly

    No one wants to sit next to the stinky kid who only showers once a month. Don’t be like the stinky kid and only reconcile once a month. Reconcile weekly for large folios, twice weekly for smaller folios and once a week for tiny folios. Simple!

Who would have thought a lesson in Trust Accounting could be as easy to follow as 5th grade.

But there you have it!

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 27 years’ industry experience. Don’t trust just anyone with your trust accounting. Book an appointment with an End of Month Angel today.