Trust accounts for auditors
Real estate trust accounts must be audited and auditors of these trust accounts have specific duties.
All nominated auditors will receive a letter from REA that contains information on auditing an agency's trust accounts.
Requirements for qualification as a nominated auditor
A person may be appointed as the auditor of an agency's trust accounts if they:
- are a qualified auditor under section 35 (external link)of the Financial Reporting Act 2013(external link)
- are not disqualified from auditing the agency's trust accounts under regulation 11(external link) of the Real Estate Agents (Audit) Regulations 2009.
See section 37 of the Financial Reporting Act 2013(external link) for information on the appointment of a partnership as an auditor.
Required standard for audits
A trust account audit should be conducted to the standard required of a reasonable assurance engagement as specified by the Standard on Assurance Engagements 3100 (SAE 3100).
Download the SAE 3100 standard(external link).
Duties of auditors
The specific duties placed on auditors are summarised below. Auditors should also be familiar with the full details of these duties by referring to the Real Estate Agents (Audit) Regulations 2009.(external link)
It is an offence to fail, without reasonable excuse, to comply with the regulations. The penalty is a fine of up to $15,000.
Trust account examinationsAuditors must examine each trust account at least three times each year in accordance with the specified examinations periods in the following schedule. The examination periods are the same as those set down in the 1977 Audit Regulations.
Two months to 31 May
1 July - 31 August
Five months to 31 October
1 December - last day of February
Five months to 31 March
1 April - 30 June
Trust account annual audit
Auditors must provide an annual audit report to the Real Estate Authority within 10 working days of completing the final audit for the year. This audit report must be signed and use the REA template or be in accordance with it. Auditors must also supply a signed copy of the audit report to the agent. REA will acknowledge the receipt of the audit report submitted within 10 working days.
Download a PDF version of the audit report template [PDF, 85 KB].
Download a Word version of the audit report template [DOC, 41 KB].
Prompt reporting to REA
Auditors must promptly report any of the following matters to REA:
- Trust account records that do not clearly show the trust account balances of each client or that are not kept in a manner that enables them to be properly audited.
- Any matter involving dishonesty, or a breach of law on the part of the agency.
- A loss or deficiency of trust account money, or a failure of the agency to account for any trust account money.
- Any failure to comply with the provisions of the Real Estate Agents Act 2008 or the Real Estate Agents (Audit) Regulations 2009 relating to the agency's trust accounts: this includes failure to supply you, in a timely fashion, with the documents you need to fulfil your responsibilities.
- Any other matter such as errors, irregularities, or misstatements in a trust account that the auditor believes should be reported.
- Auditors must advise REA whenever any notification of an inactive or reactivated trust account is received from an agent (in accordance with regulations 25 and 26(external link)(external link) of the Audit Regulations).
Before a new agency receives any money in respect of their first transaction, they must inform REA of their nominated trust account auditor.
Any fees payable by an agency to an auditor are to be agreed by the agent and the auditor. The cost of auditing any trust accounts is the sole responsibility of the agent.
Are residential property letting trust accounts covered?
Trust accounts that deal solely with residential letting are not covered under the Real Estate Agents Act or Audit Regulations because residential property letting is excluded from the definition of real estate agency work. Refer to section 4(external link)(external link) of the Act.
Auditors are not required to provide reporting to REA for any audits carried out on trust accounts related to residential property letting that are administered by licensees, providing the trust account(s) deal solely with residential letting transactions, with one exception. If an auditor discovers any irregularities while completing a trust account related to residential property letting, they must inform REA immediately. We do not need confirmation that a residential property letting trust account is being operated appropriately but do need to know if the opposite is true.
(Trust accounts that deal with commercial property leasing are covered under the Act and Regulations.)
Where both real estate and residential property letting transactions occur within one trust account, auditors must provide an audit report based on their findings as they pertain to all transactions in the account.
Audit programme guide
REA has developed an audit programme guide in two formats to assist auditors in meeting the minimum requirements of the 2009 Audit Regulations. Auditors are not required to complete this guide or return it to REA.