Preparing for a trust account audit for real estate can feel stressful, especially if it’s your first time. But with clear steps, the process becomes simple and manageable. This guide walks you through what to prepare, how to organise your records, and key tips to stay compliant with Australian regulations.
1. Start Early and Make a Plan
Begin at least four weeks before your audit.
Create a timeline of tasks and assign responsibilities to staff. Early planning reduces last-minute stress and ensures nothing is overlooked.
2. Gather Key Documents
Collect all essential records, including:
- Bank statements for the audit period
- Client ledgers and journals
- Deposit slips and cheque stubs
- Receipts, invoices, and payment confirmations
Keep both paper and digital copies. Well-organised files make the audit faster and smoother.
3. Reconcile Monthly Statements
Reconcile your trust account every month.
Compare bank entries to client ledgers, and resolve any discrepancies. Auditors check reconciliations closely, so clean records are essential.
4. Review Unallocated and Unidentified Funds
Check for unallocated or unidentified money in your trust account.
Trace each amount to a client or transaction. If you cannot find the source, document your search and plan follow-up steps.
5. Check Authorisations and Agreements
Ensure all client agreements and payment authorisations are signed and on file.
This proves that all transactions were approved and handled correctly.
6. Verify Fee Transfers and Commissions
Confirm any fees or commissions transferred from trust to business accounts.
Each transfer should be supported by proper documentation. Make sure client consent is recorded where necessary.
7. Conduct an Internal Pre-Audit
Run an internal review before the auditor arrives.
This helps catch minor errors early and ensures your records are tidy. A simple pre-audit saves time and reduces stress during the official review.
8. Prepare Past Audit Reports
Gather previous audit reports and evidence of any corrections made.
Auditors appreciate seeing improvements and consistent compliance over time.
9. Limit Access and Train Staff
Only trained staff should handle trust account records.
Limit access in accounting software and ensure everyone understands their responsibilities. Proper training prevents errors and protects your records.
10. Communicate with Your Auditor
Clarify what documents your auditor needs and in which format.
Agree on how to deliver files, whether digitally or in print. Clear communication makes the audit run smoothly.
Conclusion
A successful audit comes down to organisation, careful record-keeping, and proactive preparation. Start early, keep your files organised, reconcile regularly, and address issues as they arise. Following this step-by-step guide ensures your trust account is compliant, your clients’ funds are protected, and audit day is stress-free.
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