Estate agents Trust accounts

Dear Client

Estate agents – general accounting and trust account audits

We have considered the content of the many legislation changes that have been implemented by government and various statutory bodies in the past few months and want to bring it under your attention.  These are the recent changes that may affect your business:

  •  Introduction of the new Companies Act on 1 May 2011
  • EAAA (Estate Agency Affairs Act) and EAAB (Estate Agencies Affairs Board) audit and reporting requirements
  • IRBA (Independent Regulatory Board for auditors) compulsory auditing, accounting and reporting requirements
  • FICA (Financial Intelligence Centre Act)

Section 29 of the EAAA places the onus on the estate agent to ensure that the business and trust account records are properly maintained and audited annually.  The audit of the business account was not previously enforced, but IRBA and EAAB have agreed that the audit of the business will now be applicable.

Extract of Section 29 Duty of an Estate Agent to keep accounting records:

  1. Every estate agent shall in respect of his activities as such:
    1. Keep in one of the official languages at an address in the republic such accounting records as are necessary fairly to reflect and explain the state of affairs.
      1. Of all moneys received or expended by him, including moneys deposited to trust account referred to in section 32(1) or invested in a savings or other interest-bearing account referred to in section 32(2)(a)
      2. Of all his assets and liabilities, and
      3. Of all his financial transactions and the financial position of his business
      4. Cause the accounting records referred to in paragraph a to be audited by an auditor within four months after the final date of the financial year of the estate agent, which final date shall after the commencement of section 9 of the Estate Agents Amendment Act, 1984, not be altered by him without the prior written approval of the board.

The required audit report details the extent and scope of the review/audit and related procedures to be undertaken by our practice.  Important information to note:

  • It is the agent’s responsibility to comply with the various Acts
  • The auditors are required to audit the business and trust accounts.  The use of separate auditors for the business and trust accounts is not permitted
  • The auditors are required to report on compliance and non-compliance (reportable irregularities)
  • Additional reporting requirements are in terms of FICA and the Auditing Professions Act.

Please review and familiarise yourselves with the content of the extracts.

How does this affect you as the estate agent?

You will be required to decide whether to make use of our services or not (if your business account is not already audited by ourselves).  A response is required from clients who operate as sole proprietorships, partnerships or close corporations.

A prompt response and supply of the relevant and required information is critical.

Note:  If your business account/records are already subject to audit then no action is required.

 

Our service offering includes:

  • An initial consultation with Maryke Enslin who will be available to discuss the specific audit requirements
  • The provision of an estimate of costs for the additional work to be undertaken.

 

Important date

EAAB reporting deadline is 30 June 2012 or 4 months after year end (should the business year end not be February).

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