The establishment of a trust account is a mandatory requirement to ensure the protective custodianship of money belonging to letting pool owners and tenants.
Trust funds for the Management Rights Industry in Queensland is governed by the following Queensland State Legislation
- Property Agents and Motor Dealers Act 2000 (as amended) : The Act
- Property Agents and Motor Dealers Regulations 2001 (as amended).
Both of these are commonly referred to as PAMDA.
A licensee who receives money in respect of a trust account transaction must immediately on receiving those monies pay them into a trust account with an approved bank.
The monies must be banked into the trust account in accordance with PAMDA and shall be retained therein until disbursed in accordance with PAMDA.
A licensee should also not pay into the trust account monies other than monies that are required to be paid into that account.
A licensee shall then be entitled to draw monies against those funds held in trust in payment or expenses, commission or other charges incidental to the transactions together with any monies owing to the licensee by the person on whose behalf they were paid.
Trust Account Audit
Section 401 of the Act specifies “What Trust Account must be audited “.
Section 402 covers the “Time for Audit “.The first audit period after the granting of a licence finishes eight months after the end of the month in which the licence is granted and then on a twelve month cycle thereafter.
During the audit period the auditor is required to make two visits to examine the trust account of the licensee and the final visit is then made with relevant notice being given to the licensee by the auditor. The regulations prohibit an auditor from making an unscheduled examination of the trust account during the period two months before or after the annual audit or other unscheduled examinations.
In total there are three annual visits. The purpose of the frequency of these audit visits is to disestablish an audit inspection pattern in respect to those visits so they remain as they are intended to be in accordance with the Act.
Trust Account Cashbooks or Computer Records
As to whether you choose to keep manual or computerized records, is a matter of personal choice but most licensees chose computerized systems.
All particulars are required to be entered into the manual records or computer. The trust account records are required to be balanced each month and reconciled with the bank balance as at the last day of the month.
Please refer flowchart below:
| CASHBOOK JOURNAL |
OPENING BALANCE PLUS RECEIPTS LESS PAYMENTS |
=$ BALANCE |
| BANK RECONCILIATION |
STATEMENT BALANCE PLUS O/S DEPOSITS LESS O/S PAYMENTS |
=$ BALANCE |
| CONTROL LEDGER ACCOUNT |
SUM OF EACH OWNERS LEDGER BALANCE |
=$ BALANCE |
NOTE: PAYMENTS CANNOT EXCEED RECEIPTS AS THE TRUST BANK ACCOUNT NOR ANY INDIVIDUAL OWNER’S LEDGER ACCOUNT IS PEERMITTED TO BE OVERDRAWN AT ANY TIME.
Trust Account Ledgers
All entries made through the trust account cash receipts and payments book are required to be posted forthwith into the trust account ledger and then reconciled at the end of each month with both the bank reconciliation and the cash book reconciliation.
The General Account
The necessity to keep records in regard to your general account relate back to the requirements of either the Corporations Law and/or the Income Tax Assessment Act.
As well as keeping the statutory records required to be able to substantiate income and expense items, it is necessary to maintain a sound record keeping procedure so the proper analysis of the financial operation of your business can be ascertained.
This also means accurate figures can be made readily available should you consider the sale of your business.
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