Auditor’s Corner – Trust Account “Inspections by Letter” Program

By Emmet R. Wood, Director, Audits and Investigations

Keep an eye on your mail!  If you are a broker-in-charge, there could be a letter from me on the way to you or already on your desk.

The Commission’s program of conducting “spot” audits of real estate brokerage firm trust account records is expanding.  In addition to auditor/investigators visiting real estate offices to inspect trust account records, letters are now being sent to certain brokers-in-charge requesting a response by mail.  The letter requests a response by a certain date regarding records covering a specific period of time.  The types of records that can be requested include:

Bank reconciliations

Trial balance

Cancelled checks

Journal

Deposit tickets

Ledger cards

I will send out inspection letters throughout the year.  If you receive a letter and have questions about what is requested, please contact the Audits and Investigations Division for assistance.

Once copies of your trust account records are received at the Commission office, a staff auditor will examine them, contacting you to clarify any questions that may arise.  Upon completion, the auditor will prepare and mail to you a report explaining the compliance (or noncompliance) of your trust account records with the Commission’s rules and Trust Account Guidelines.

If you fail to respond to the letter, an auditor/investigator will visit your office to complete the inspection.

To prepare for any future inquiry into your trust account records – whether in person or by letter – carefully review your records and procedures now to see that they comply with Commission rules.  To assist you in properly maintaining trust monies and trust account records, the Commission offers the following instruction:

Basic Trust Account Procedures course (see page three of this issue of the Bulletin for scheduling, or click on Course Registration on the Commission website).

Broker-in-Charge course (for brokers-in-charge, the first day of the Broker-in-Charge course covers trust account procedures.

Trust Account Procedures for Resort Property Managers course (contact the Audits and Investigations Division for course scheduling)

Commission rules A.107 and A.108 and the Trust Account Guidelines (both available on the Commission’s website).

Remember, it is essential that your handling of trust monies conforms with both the spirit and letter of the law.

This article came from the January 2009-Vol39-3 edition of the bulletin.