It is the end of May. Under reg 15 of the Real Estate Agents (Audit) Regulations 2009, what must the agency do about its trust accounts, and by when must it send the results to its auditor?
Correct Answer
B) Reconcile at month end and send balances and reconciliation by 20 June.
Regulation 15 requires the agency to reconcile its trust account balance at the end of each month with its cash book and the total of client ledger balances. By 27 January and the 20th day of every other month, it must give its auditor the list of client ledger balances and the reconciliation statement for the previous month. A 'nil' return is given if no money was held.
Why This Is the Correct Answer
May's reconciliation and list of balances are due to the auditor by 20 June.
Why the Other Options Are Wrong
Option A: Reconcile once a year and give the auditor the result at the final examination.
Regulation 15 requires reconciliation at the end of each month, not annually.
Option C: Reconcile at month end and send the results to the Authority by 10 June.
Monthly lists and reconciliations go to the auditor, by the 20th of the month (27 January for December).
Option D: Reconcile quarterly and send the auditor a list only if balances changed.
Reconciliation is monthly, and a 'nil' return is required even when no money is held.
Background Knowledge for Compliance
Source: https://www.legislation.govt.nz/regulation/public/2009/0279/latest/whole.html
Exam Tip for Compliance
Monthly reconciliation to the auditor by the 20th, or 27 January for December.
Common Mistakes to Avoid on Compliance Questions
- •Thinking monthly trust account returns go to the Real Estate Authority.
More Compliance Questions
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Under the Fair Trading Act 1986, which statement about advertising a property for sale is correct?
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An agent holds $180,000 in trust across four transactions. One agreement is validly cancelled because the purchaser's finance condition was not met, and both parties' lawyers confirm the $60,000 deposit is to be refunded to the purchaser. What is the correct trust account procedure?
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- → An international client buying a $2.8 million commercial property provides a copy of their overseas passport but refuses any further identity checks or information, claiming diplomatic immunity. How should the agent proceed under AML/CFT requirements?
- → Which statement best describes the trust account requirements under the Real Estate Agents Act 2008?
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- → According to trust account regulations, how long must real estate agencies retain records of trust account transactions?
- → What is the primary purpose of the Consumer Guarantees Act 1993 in relation to real estate services?
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- → A real estate agency's trust account shows a shortage of $5,000 during a routine audit. What is the most serious disciplinary order available under the Real Estate Agents Act 2008?
- → A real estate agent advertises a property as having a 'new roof' when they know it was repaired but not replaced. A buyer purchases based on this information and later discovers the truth. Which Acts could potentially apply to this situation?
- → Which statement best describes the primary purpose of trust accounts in real estate transactions?
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