Some professionals such as Real Estate Agents and Lawyers keep trust accounts where funds are held on behalf of their clients. Special accounting rules exist for trust accounts and a Trust Audit is designed to ensure compliance with these accounting rules.
A Trust Report is required to be prepared each fiscal year by your CPA to report the findings of the Trust Audit. The relevant Professional Standards Regulation Board will provide a list of procedures to be followed to complete the annual Trust Audit. The Accountant will choose a sample of accounts to audit based on the guidelines provided and complete the required procedures on the sample chosen. Notable trust audits in British Columbia are required by the Law Society of BC and Real Estate Council of BC. Some of the typical items to be confirmed are:
- Payments from the trust account are authorized and supporting documentation for the payment is on file
- Trust accounts are reconciled monthly and reconciliation reports are reviewed and approved in a timely manner
- Monthly statements are provided in a timely manner to the clients and match the accounting records
- Deposits received are deposited in a timely manner and recorded correctly in the accounting records
- Interest is dealt with per the regulated standards
Any findings of non-compliance with the regulations laid out by the Professional Standards Regulation Board are reported in the Trust Report. The Trust Report is then sent to the appropriate Professional Standards Regulation Board for the Board to review and act upon if required.