Trust Account Audit
Kingston & Knight Audit trust account audit services are designed to ensure the compliance of your small-entity trust account. Real-estate agents, solicitors, and other professionals are required to hold client moneys in a designated trust account, which must be audited yearly within a prescribed timeframe. Kingston & Knight Audit can complete your trust account audit within this timeframe and provide you with an auditor’s report for submission to the regulator. With decades of experience in financial services delivery, audit and assurance services, and accounting for trusts, we have the knowledge and professionalism to complete your trust account audit to the highest standard at a competitive price.
During your trust account audit, you will be required to provide access to certain information and to communicate with the auditor as required throughout the process. On this page we will explain our trust account audit services to give you an idea of what to expect when you engage Kingston & Knight Audit to complete your yearly trust account audit. For more information, contact us to receive a free telephone consultation where we will discuss your requirements and why our trust account audit services are right for you.
An audit plan is developed during the initial consultation, outlining the client’s requirements, circumstances, and expectations in relation to our trust account audit services. The audit plan must meet your expectations as well as our responsibilities as approved trust account auditors, so the planning process is reliant on clear communication by both parties.
The purpose of a trust account audit is set out in the plan so that you have a clear understanding of what is involved:
- To ensure that accounting information and financial records that relate to client monies and trust account money have been kept in accordance with the prescribed standards;
- Determine if any loss or deficiency of trust monies has occurred during the period under audit, including any failures to account for or pay trust monies; and
- To ensure that the trust account, and the entity that established and uses it, has complied with the relevant legislation and regulations.
Your trust account audit plan will set out the timeframe covered by the audit and when it must be lodged. It will also outline which accounting records that you must provide access to, which would be all accounting records for transactions involving client moneys and trust account money. Your trust account audit plan will also outline the procedures to be undertaken by the appointed auditor, including the relevant regulations and legislation that the fund must comply with. How the auditor will form an opinion regarding the entity / fund’s compliance is also stated in the audit plan.
The audit process begins with extensive planning by the appointed auditor, beyond the scope of the audit plan described above. This planning will require the cooperation of the trust account holder so that the auditor can decide the best way to conduct the audit. How long the audit will take to complete, the scope or extend of the audit procedures, and the general nature of the audit process will vary depending on:
- the nature of the client’s business, including its structure and size, i.e. whether the business is a large firm, small practice, or sole practitioner;
- the services provided by the client’s business, and when / how money is to be received in trust for the provision of these services;
- average size of transactions involving the designated trust account;
- volume of transactions affecting the designated trust account; and
- whether there exists a segregation of duties in relation to the designated trust account.
These factors are of vital importance in drafting a plan of the audit process for your trust account audit. They are also taken into account by the auditor when they are required to complete an assessment of risk as part of the audit process.
Audit procedure is set out in legislation and regulated to ensure that the trust account auditor is eligible to conduct the audit, and that financial audits are standardised. The prescribed audit procedure is designed to ensure that the trust account audit accurately tests compliance with regulations, covers the entire period since any previous audit, and contains measures that minimise the risk of fraud or other breaches not being detected and reported by the auditor. It is the auditor’s responsibility to plan the trust account audit so that it is performed in accordance with the prescribed audit procedure.
As part of the trust account audit procedure, the auditor must assess the structure and function of the client’s internal controls in relation to the trust account and transactions involving client monies. The auditor can then form an opinion on whether these internal controls comply with the relevant legislation and regulations. The strength and structure of these internal controls will vary according to the size and nature of the business under audit, and this is accounted for in the audit plan.
According to best practice, the following internal controls should be present to ensure compliance with trust account regulations:
- supervision of trust account operations by a partner in the firm;
- transactions involving client monies are segregated from other transactions in terms of authorisation, recording, and custody;
- monthly independent reconciliation of trust account records to bank accounts for trust money; and
- systematic and adequately standardised record keeping practices that document all transactions which involve the trust account and client monies.
Once internal controls have been assessed and documented, the auditor will inspect supporting documentation and perform any other actions required as part of the prescribed audit procedure.
Kingston & Knight Auditors Melbourne can be relied on for open communication, complete and inclusive audit planning, compliance with prescribed trust account audit procedure, and outstanding customer service throughout the engagement. Estate agents, law practices, and other small entities with a yearly trust account audit requirement can contact us for a free telephone consultation to discuss your audit time-frame and other relevant details. Kingston & Knight Auditors Melbourne can be reached on 1800 283 471, or email us via firstname.lastname@example.org.