For agency principals and licensees, the annual trust account audit is one of the few compliance jobs where the buck really does stop with you. Your auditor lodges the report, but getting it done properly and on time is the licence holder’s responsibility. A clean audit protects your licence, your reputation and the trust of every landlord, tenant, vendor and buyer whose money passes through your books.
The good news is that a smooth audit is almost never the result of a frantic scramble in the last few weeks. It comes from ordinary habits kept up all year. Here’s how to set yourself up for a result you don’t have to lose sleep over.
The short version
- Know your audit period and lodgement date. They differ by state, and in Queensland and South Australia they depend on your own licence cycle.
- Reconcile the trust account every month, no exceptions, and have it reviewed and signed.
- Every trust transaction needs a document that says what the money was, whose it was, and why it moved.
- A trust account must never go into deficit, even for a day.
- Do your own dry run a few weeks out and fix what you find before the auditor does.
Know your deadline and who’s responsible
Trust account rules vary by jurisdiction, so step one is simply knowing the calendar that applies to you. In New South Wales, for example, the audit period runs from 1 July to 30 June and the auditor’s report has to be lodged with NSW Fair Trading by 30 September. Lodge late and you risk fines and, in serious cases, suspension or cancellation of your licence.
Other states and territories run to their own periods and deadlines. Western Australia audits on the calendar year. Queensland’s audit period depends on the month your licence was issued. South Australia ties it to your annual return. Confirm yours rather than assuming it matches the agency next door. Our state-by-state trust accounting pages and compliance calendar set out each one.
In New Zealand, agency trust accounts are examined three times a year under the Real Estate Agents Act 2008 and the Audit Regulations 2009, against a reporting year ending 31 March. Your auditor has to give the annual report to the Real Estate Authority within 10 working days of finishing the final audit, and must promptly report any breach or irregularity they find. One thing worth knowing: residential property management trust accounts sit outside the Act. If you handle both agency and property management money, keep them in genuinely separate accounts and be clear about which rules apply to each. Our New Zealand trust accounting page has the detail.
The common thread in both countries is that getting the audit completed and lodged on time is your obligation, not your auditor’s. Diarise the deadline now and build in a buffer.
Reconcile every month, no exceptions
If there’s one habit that separates a painless audit from a painful one, it’s monthly reconciliation. Your trust account should be reconciled to the bank statement at the end of every month, then reviewed and signed off promptly. The reconciled balance has to match your trust ledger, and any difference, however small, gets investigated and resolved straight away rather than carried forward.
Auditors look closely at how quickly and cleanly you reconcile. A trail of tidy, on-time reconciliations tells them your controls work. A backlog of unreconciled months tells them the opposite, and invites a much deeper look.
Keep your records complete and easy to find
Auditors test a sample of transactions from receipt to disbursement, and they expect to follow the paper trail without gaps. That means receipts, deposit records, disbursement authorities, management agreements, tenancy agreements and bank statements all need to be organised and retrievable for the whole retention period. Every trust transaction should have a document behind it that explains what the money was, whose it was, and why it moved.
The findings that trip agencies up most often are the usual suspects: unpresented cheques sitting there for months, receipts not issued promptly, disbursements made without proper authority, and money held in trust with no clear owner. Clearing these as they come up is far easier than explaining a year’s worth of them under audit. We’ve covered the five red flags that most often trigger an adverse finding separately.
Never let the trust account go into deficit
This is the cardinal rule. A trust account must never be overdrawn, and one client’s money must never be used to cover another client’s shortfall. Even a brief, accidental deficit is a serious breach. In Victoria it also has to be reported to Consumer Affairs Victoria and your auditor within three business days.
Build controls that make it hard to over-disburse. Check cleared funds before paying out. Separate receipting from disbursing where your team is big enough. Limit who can authorise payments.
Fix problems before your auditor finds them
Treat the audit as a review of good practice you already follow, not a deadline to cram for. A few weeks out, run your own dry run:
- Confirm every month in the period is reconciled and signed.
- Chase up outstanding and unpresented items.
- Check the ledgers balance to the bank.
- Make sure the documentation is complete and in one place.
If you uncover a problem, fixing it yourself and being able to show how looks far better than having the auditor find it for you.
Then give your auditor clean, complete records and one person who can answer questions quickly. Audits stall when auditors have to chase missing statements or wait days for a reconciliation. The more organised your handover, the faster and cheaper the audit.
Build a rhythm, not a panic
Staying compliant is really about rhythm. Reconcile monthly. Review as you go. Keep the documentation current. Separate duties. Diarise the deadline. Do those consistently and the annual audit becomes a formality rather than an ordeal, and your licence, your landlords and your sleep are all the better for it.
Trust accounting is detailed, state-specific work, and it’s easy for a busy agency to fall behind. We keep real estate trust accounts accurate, reconciled and configured to pass audit across Australia and New Zealand. If you’d like yours in audit-ready shape before your deadline, get in touch.