Every agency that holds client money knows the feeling in the weeks before the annual trust account audit. Even well-run offices get a knot in the stomach, because one overlooked detail can turn a routine sign-off into an adverse finding, a please-explain from the regulator, or worse.
The good news is that most adverse findings come from a small, predictable set of problems. Here are the five we see most often, and what actually fixes them.
The short version
- Dormant ledgers, overdrawn ledgers, late or unsigned reconciliations, slow banking and undocumented adjustments cause most adverse findings.
- None of them is complicated on its own. Volume is what catches agencies out.
- Each one is fixed by a monthly habit, not a pre-audit scramble.
- Since 1 July 2026, auditors are also asking about AML/CTF client checks alongside the traditional tests.
1. Dormant ledgers nobody has looked at
Money sitting in a client ledger for months or years with no movement is one of the first things an auditor checks. It might be an old bond top-up, a refund nobody claimed, or a landlord who sold up and was never fully paid out. On its own it isn’t fraud. But it signals weak oversight, and once an auditor finds one dormant ledger they start looking harder for others.
The fix: make it a monthly habit. Run a report of ledgers with no activity in the last 60 to 90 days and clear the backlog before it becomes a pattern.
2. Negative or overdrawn ledgers
An overdrawn ledger, even by a few dollars, is a reportable breach in every state. It usually happens when a payment goes out before the matching receipt has cleared, or when a fee is taken twice. Auditors aren’t interested in intent. A negative balance is a negative balance.
The fix: a documented explanation and a corrective entry, not a quiet top-up from another ledger. Then a control that stops it happening again, such as checking cleared funds before every disbursement.
3. Reconciliations that are late, incomplete or unsigned
A trust account that agrees to the bank statement is only half the job. Auditors expect all twelve months of the audit period reconciled, reviewed and signed off by the licensee in charge, with a date on each one. A missing signature or a skipped month is enough to trigger questions, even when the numbers are perfect.
The fix: reconcile at month end, every month, and sign it the same week. If you’re in Victoria, remember a deficiency has to be reported to Consumer Affairs Victoria and your auditor within three business days, which only works if your reconciliations are current.
4. Banking timeframes that slip
Most states require trust money to be banked within one or two business days of receipt. When rent turns up as cash, a cheque or a manual transfer outside your usual receipting flow, that’s where timeframes slip, especially around long weekends or when someone’s on leave. Auditors sample transactions and compare the date received with the date banked. It isn’t a rule you can be casual about.
The fix: push every payment method towards electronic receipting, and give someone the job of banking anything that arrives outside it the same day.
5. Adjustments with no audit trail
Corrections happen in every trust account. What auditors want to see is why. A ledger adjustment with no note explaining the reason, who approved it and when looks exactly like an attempt to cover something up, even when it’s completely innocent.
The fix: every adjustment carries a short, plain-English note at the time it’s made, not weeks later when the auditor asks.
The bigger picture for 2026
Trust account compliance picked up a second layer this year. Since 1 July 2026, real estate agents who sell property fall under the federal AML/CTF regime through AUSTRAC, which adds customer due diligence and suspicious matter reporting on top of your state-based trust obligations. Auditors are already asking about know your customer (KYC) records and the cybersecurity around banking data, alongside the traditional checks above. Our guide to the Tranche 2 rules explains what applies.
None of these five issues is hard on its own. What catches agencies out is volume: dozens of ledgers, hundreds of transactions a month, and a small team trying to keep on top of it all while also running open homes, chasing arrears and answering the phone. That’s exactly why a dedicated set of eyes on the trust account, checking these five things every month rather than once a year, makes such a measurable difference to audit outcomes.
If you’d like those eyes on your trust account before your next audit lands, we work exclusively in this space and can run a pre-audit health check against all five red flags well before your auditor does. Our audit preparation guide covers the rest of the run-up, and the compliance calendar has every lodgement date. Get in touch to book one.