Assignment Task
Part A – Multiple Choice Questions
Assessor to complete shaded areas:
When an agent receives trust funds, in what order is the money recorded:
- Receipt book, ledger, cash book
- Cash book receipt book, ledger
- Cash book, ledger, trial balance
- Receipt book, cash book, ledger
If a cheque is received that comprises both “trust monies” and “non-trust monies” the licensee must take the following action:
- Pay the cheque into the office “General Account” and transfer the Trust Money to the Trust Account as soon as practicable
- Pay the cheque into the office “General Account” and transfer the Trust Money to the Trust Account within 14 days
- Pay the cheque into the Trust account and transfer the non-trust money to the General Account as soon as the money becomes available.
- Either (a) or (c)
Trust money held on behalf of a person is available to:
- Be held by the licensee in a trust account bank account
- Be held exclusively for the person
- Paid or disbursed to that person or the person nominated by them
- To pay licensee’s creditors
- (a), (b) and (c)
True or False:
All cancelled receipts and cheques must be recorded in the cash book and ledger.
Assessor to complete shaded areas
The licensee must ensure that a backup copy of all computerised records:
- Is not kept at the licensee’s business address or office address
- Is conducted at least every month
- Is kept in a fireproof safe
- Is kept in such a manner that any incident cannot affect the records
- (a), (b) and (d)
Within 21 days after the end of each month the licensee must:
- Balance the Trust Cash book for the previous month
- Complete a Trial Balance for the previous month
- Reconcile the Trust Cash Book to the Trust Bank Statement
The licensee must ensure that if a computer system is used to retain trust records that:
- The computer programme cannot delete a ledger account unless the account balance is zero
- A record of the deleted ledger account is retained in visible form
- A back-up must be made at least monthly
- Transactions cannot be reversed; amendments must be made by entering a separate transaction to rectify errors
- (a) and (d) only
- (a) to (d)
Trust Monies must be banked:
- Immediately to the Trust account on the same day as receipt
- Before the end of the week into the trust account
- In person at the bank
- By the end of the next business day after receipt
- All of the above
Trust Records must be kept:
- In visible form
- At the Licensee’s registered office
- By computer
- All of the above
What date is the prescribed day for external auditing trust accounts?
- 30 January
- 30 June
- 30 September
Assessor to complete shaded areas
Licensees must ensure that they:
- Properly supervise the business carried on by the licensee
- Establish procedures ensuring compliance with the Act
- Keep trust account documents and records for at least 3 years
- Keep trust account documents and records for at least 5 years
- (a), (b), and (c)
- (a), (b), and (d)
A trust account receipt issued in respect of moneys received must show the following information (in addition to other information):
- The name of the licensee
- The licence number of the licensee
- The date the receipt was issued
- The words “Trust Account”
- The amount of money received in figures only
- (a), (c), and (d)
- (b), (c), and (e)
Within what period of time must a licensee notify the OFT in writing after becoming aware that the Trust Account has been overdrawn?
- Immediately
- Within 5 days
- Within 7 days
- Within 14 days
- There is no need to notify the OFT
To which Government department does a licensee now have to report details of unclaimed trust money?
- Office of State Revenue
- Office of Fair Trading
- Police Department
- Australian Taxation Office
Who must agents notify in writing that a trust account is being opened?
- Their solicitor
- The agency’s office manager
- The authorised financial institution
- Office of Fair Trading
- (c) and (d)
Assessor to complete shaded areas
Who is qualified to audit a trust account?
- A representative of the OFT
- Any person nominated by the licensee
- A registered company auditor or a person approved by the OFT, and members of a professional accounting body as long as they hold a Public Practising Certificate with one of those bodies
- (a) and (c)
What is the purpose of a bank reconciliation?
- A record of monthly transaction history
- Cash control measure designed to eliminate known differences between the bank account and the cashbook
- A way to keep in touch with the bank
When must a bank reconciliation be completed?
- Within 21 days of the end of each month
- Within 14 days of the end of each month
- Within 7 days of the end of each month
- At the end of each month
Identify where the words “Trust Account” must appear.
- On receipts
- Letterhead
- All cheques drawn on the trust account
- (a) and (c)
- (a), (b) and (c)
What is the legislative requirement for closing a trust account?
- Immediately inform OFT in writing
- Inform OFT in writing within 7 days
- Inform OFT in writing within 14 days
- Inform OFT in writing within 21 days
When completing a bank reconciliation, if the bank statement is correct but the agency cashbook has errors, where do you make the adjustment?
- On the bank statement
- On the cashbook
- On the bank statement and the cashbook
Assessor to complete shaded areas:
The money placed into an agency’s trust account can be used:
- By the agency to manage day to day cash flow
- Only as instructed by the beneficial owner of the funds
- By the agency licensee in charge to pay administration salaries
Circle the three (3) key features of the relationship between an agency and the principal (client)
- Authorises the agent to find a third party who is willing to agree to the principal’s terms
- To ensure that the purchaser gets the best deal possible
- To act within the constraints of the contractual and fiduciary obligations as described by the legislation
- Evidenced by a written authority (namely the agency agreement)
True or False:
- A real estate agent has a binding fiduciary relationship with a buyer and a tenant.
True or False:
- The Act and Regulations do not dictate whether a licensee should maintain manual or computerised operating systems.
True or False:
- A licensee must maintain a separate ledger account for trust money received on behalf of or paid to each person on behalf of whom the agent acts.
True or False:
- A person who signs a trust cheque or effects a trust EFT purporting to do so as the delegate of a Licensee but who has not been authorised to do so in accordance with the Regulations is guilty of an offence
True or False:
- As it can become difficult to manage large numbers of transactions, an agent can have a separate Sales Trust Account and a Property Management Trust Account
Circle the three (3) reasons why a source document is important?
- Provides written evidence that a transaction has taken place
- Provides the data that is recorded into the accounting system.
- The records must be kept as evidence by the Licensee for at least 1 year
- The records must be available for inspection at all reasonable times by an authorised officer
Part B – Written Answer Questions
As part of your assessment of this unit of competency you are required to complete the following written answer questions
Participant Instructions:
- Read the questions carefully to ensure you have understood them.
- Provide your response in the space provided in your own words.
- If you are submitting on a separate document, please include the original question with your answer. As a guide, responses should be 2 or 3 sentences and up to ½ page in length on an A4 page with 12-point font size.
- If a question relates to legislation you should correctly reference the act and section of the act that applies.
- You MUST handwrite your name and signature onto every page you submit with your assessment. Failure to do so will result on your assessment being returned to you unassessed.
- Contact your assessor if you require further clarification
Assessor to complete shaded areas
In the Property and Stock Agents Act 2002 are the following 2 phrases that relate to Trust money. Explain each briefly in your own words:
- An agent must keep clients’ money separate from their own
- An agent must account for all expenditure made on behalf of a client
In the Real Estate sector, what are two main objectives for having Trust Accounts?
Assessor to complete shaded areas
When a purchaser requests the sales deposit to be invested, what special purpose Trust Account will the amount be deposited in?
- How and when is the interest that is earned on the deposit shared?
Name five (5) sources of trust money?
For Real Estate Agents in NSW, what Regulation gives stipulations of Trust Account management?
A Licensee that fails to notify the Director-General in writing of a Trust Account becoming overdrawn along with the required details can be penalised for what amount?
How will a Licensee be affected when breaches of the legislation involving Trust Accounting occur in their office?
How will a Client’s trust and confidence in the agency be affected when breaches of the legislation involving Trust Accounting occur?
Assessor to complete shaded areas
If a Licensee uses a computerised system for their Trust Accounting, it must have certain characteristics. List five (5) features and aspects that the software package must have:
What is an agency’s objective for its risk management policy and procedure for Trust Accounting auditing controls?
A Licensee who has authority otherwise than as a delegate to sign trust cheques or effect trust EFTs may delegate that authority to who and how many for the following situations?
- Sole proprietor or a partner:
- Single place of business.
Describe the purpose and use of a cash book.
Assessor to complete shaded areas
Describe the purpose and use of ledgers.
Can a Trust Account ledger have a balance of less than zero? (circle answer and explain): Yes / No Why?
Trust Account money received must be banked in what format and why?
What seven (7) aspects must be clearly noted on a Trust Account receipt for an amount of money received from a client.
How can a Licensee provide adequate protection for a client’s privacy and confidentiality regarding the client’s funds held in trust?
Assessor to complete shaded areas
What is a qualified audit report?
What must a Licensee and the auditor do with a completed qualified audit report?
Auditor:
Licensee:
What procedures for monitoring records and ensuring the security of trust account records can be implemented?
List four (4) ways that a Licensee can reduce inaccuracies and fraud when operating a Trust Account.
Assessor to complete shaded areas
In what circumstances would you seek other professional input on an agency problem.
Part C – Case Study
Your business owner, Martin, has decided to expand his business and has bought an office in a nearby suburb. Martin has appointed one of the existing staff, Bob Roberts, to be licensee-in charge and Maria, the admin assistant to look after the admin of the new office. Peter Livingstone has been appointed as the Property Manager. The Agency has received the following five Trust Account transactions during the month of November:
- Received a 10?posit by electronic funds transfer from Mrs. Keating, for a holiday home owned by Richmond. The holiday home was sold for $927, 000. The parties to this transaction have asked that the deposit be invested in an interest-bearing account with Regent Bank.
- An apartment owned by Jack Michaels was just leased. The tenant paid with one cheque covering the 4 weeks bond.
- Received advertising fees of $750 from Taryn Taylor. She has agreed to allow the agency to auction her property next month.
- Received 4 weeks rent from the tenant leasing the townhouse owned by Mr. Watts.
- Paid for a cleaning and maintenance fee of $275 for Mr. Michael’s property to General
Purpose Home Care
Determine which agency staff member/s as part of their job role and responsibilities, would be executing the above-mentioned transactions at the various stages? Note down applicable person responsible per process stage.
Assessor to complete shaded are
- (10?posit by electronic funds transfer which is to be invested in an interest-bearing account)
Receipt:
Banking:
Opening an IBD Account:
Recording of Trust Account transactions:
- (4 weeks bond)
Receipt:
Banking:
Recording of Trust Account transactions:
- (advertising fees of $750)
Receipt:
Banking:
Recording of Trust Account transactions
- (4 weeks rent)
Receipt
Banking
Recording of Trust Account transactions:
- (cleaning and maintenance fee of $275)
Raising request for payment with supporting invoice:
Request goes to:
Approval signed off by:
Payment made by either of two people:
Recording of Trust Account transactions:
Part D – Project / Assignment: Understanding Monthly Trial Balance, Cashbook reconciliation and Bank reconciliation
Assessor to complete shaded areas:
Identify Source Documents
From a list, identify if it could be classed as Source documents. Circle those items that are Source documents.
- Advertising in mail
- Bank statements
- Cartoon Email
- Cheque butts
- Complaining phone calls from tenants
- Google review
- Invoice
- Receipts
- StatementWeb site enquiry
- Trial Balance
When should this be done by?
Who should complete this report?
Explain how this figure is achieved B) What records are used?
What does it represent?
Assessor to complete shaded areas:
Cashbook Reconciliation
When should this be done?
Who should complete this report?
Why do we prepare this report?
What does it show?
Bank Reconciliation
When should this be done?
Who should prepare this report?
Why do we prepare this report?
What does it show?
Overview
What is the link between the Cashbook and Bank reconciliation?
How are all these 3 reports linked?
