Recent amendments to trust account audits
Amendments to the Property, Stock and Business Agents Act 2002, which commenced on 1 July 2013, change the way licensees will fulfill their responsibilities in relation to the auditing of trust accounts.
New framework for trust account audits from 1 July 2013
The amendments provide a new framework for how licensees handle their trust account auditing responsibilities under the Act, commencing from the 2012/2013 audit year including:
- While all licensees who held or received trust money during their audit year will still need to have their trust accounts audited, only those audits which are qualified by the auditor are required to be lodged by the auditor and licensee with Fair Trading;
- The term “qualified” is now defined in the amendments to the Act;
- Placing a requirement on the auditor to forward a copy of the trust account audit (if qualified) to Fair Trading within 14 days after providing the report to the licensee. A maximum penalty of 50 penalty units ($5,500) is provided for a breach of this requirement;
- Licensees who did not hold or receive trust money during the audit year will no longer lodge a statutory declaration to that effect. Instead, licensees will be required to note whether or not they did so when they next re-apply for their licence;
- Licensees are now required to hold a copy of their trust account audit (whether qualified or not) at their registered place of business, for at least three years, and make it available to Fair Trading inspectors for examination if required;
- Auditors must be registered with the Australian Securities and Investments Commission (ASIC) or be qualified under s.115 (1) (b) of the Act.
Other important amendments to the Property, Stock and Business Agents Act 2002
Opening of trust accounts
These amendments will require licensees to formally notify NSW Fair Trading each time they open a trust account with an Authorised Deposit Taking Institution. The licensee will provide Fair Trading with a copy of the form they currently provide to the Institution advising that the account they are opening is a trust account.
Closing of trust accounts
Similarly, this amendment will require licensees to formally notify Fair Trading each time they close a trust account with an Authorised Deposit Taking Institution. Notification will be in a form approved by the Director-General.
The Handling of unclaimed trust money
Presently, unclaimed trust money has been handled under provisions in the Property, Stock and Business Agents Act 2002. This will change from 1 July 2013.
NSW Fair Trading will no longer handle unclaimed trust money. Responsibility for handling unclaimed trust money will be transferred to the NSW Office of State Revenue.
The Unclaimed Money Act 1995 is amended so it can apply to unclaimed money held in a trust account under the Property, Stock and Business Agents Act 2002.
- It provides that money that has been held by a licensee for more than 2 years in a trust account kept by the licensee is unclaimed money for the purposes of the Act.
- It also provides that a licensee must make reasonable efforts to locate the owner of any money held after more than 2 years, with a maximum penalty provision of 50 penalty units ($5,500) for an offence.
- It provides that amounts of unclaimed money held by a licensee that are under $100 are unclaimed money for the purposes of the Act and the licensee is required to remit these amounts to the Chief Commissioner of the Office of State Revenue.