A surprising new survey of the real estate industry shows that a whopping 70% of agents would prefer to have teeth pulled than have a trust account audit…
…Ok, so maybe that’s not statistically true. For many agencies though, the yearly audit and anxiety around audit preparation does conjure up about the same level of enthusiasm as the annual visit to the dentist.
As the audit deadline looms closer, there is often a similar sort of anticipation of general unpleasantness, unwanted pain and a dull, gnawing fear of the possibility of expensive procedures. Whether you have been there before or are preparing for your first ever trust account audit this year, there are a few key steps you can take. These will ensure you sail through your audit and pass with flying colors:
1. LEARN WHAT YOU SHOULD BE CHECKING ON YOUR MONTHLY REPORTS
Many Property Managers just sign off on your end of month reports, and relegate them to a dusty corner. Instead, take the time to find out how to read them properly, and what key figures you should be checking before signing off on them. Taking as little as two minutes each end of month to do a few simple checks will help you identify any potential audit issues. When you find them early, you can resolve them then and there before they become costly mistakes down the track.
2. REMEMBER, FIRST IMPRESSIONS COUNT
A lack of organisation in record-keeping, or missing and jumbled audit reports (usually retrieved from the aforementioned dusty corner) is a big red flag for your auditor that screams “Caution. Time to dig deeper, there’s bound to be errors here!”
An experienced Trust Account Manager can help you setup the correct record-keeping process. This makes sure you are keeping the right records and that your reports are neat, tidy and in order at all times. This will pay dividends if you are selected for a random audit by the Office of Fair trading in your state or territory.
3. DOCUMENT YOUR PROCESSES
Property management trust accounting requires a high level of expertise and detail, which is why it is so common for mistakes to occur. This generally happens when the regular trust accountant leaves suddenly, or is away for a period of time.
Unprepared offices can be plunged into confusion resulting in unnecessary stress across the business. Seemingly small mistakes made by the delegated person or contractor can lead to many hours and dollars spent fixing issues down the road. If these issues can’t be rectified in a timely manner they can often lead to an audit breach.
You can avoid this by taking the time to document your trust accounting processes. Make checklists for daily, weekly or monthly tasks, or you can even use your smartphone to video the processes for future reference.
4. CHECK YOUR CLOSET FOR SKELETONS
Reconciling your trust regularly is the foundation of good trust accounting. While this is the case, even a balanced, healthy reconciliation can still have a few skeletons lurking beneath the surface that could cause you headaches in your next audit.
Common culprits are overpaid rents and unclaimed amounts held in trust and long forgotten about. Auditors know how to sniff these out, so keep an eye on these amounts on a regular basis and make sure they are being cleared or handled in a compliant manner.
Want to delve deeper, and make sure you next trust account audit is a breeze?
Console’s newest training courses in February 2018 titles Preparing for a Trust Account Audit will teach you how to;
- Read your reports correctly
- Use checklists to simplify your audit compliance
- Avoid the top pitfalls and costly compliance mistakes agents make
- Implement an easy 4 step system to get your trust account records into top shape, or
- Self-audit your trust reports
We hope to see you there!