CPPREP4005 Prepare to Work With Real Estate Trust Accounts

ASSESSMENT TASK 2 – Short Answer Questions

Please review the questions below and answer in 200 words / 1-2 paragraphs or less (unless advised otherwise).

1. Looking at your property legislation, both Act and Regulations, what is addressed regarding trust accounting?

2.

1. What are the different types of trust accounts an agent would use?
2. Explain the purpose of trust accounts in real estate transactions.

3. Answer the following regarding receipting for trust money.
   1. What must be shown on receipts?
   2. What is the requirement for how the money was received?
   3. What is required if the person paying the money is different to the person nominated on the contract for sale?
   4. What records must be kept for trust money receipts?

4. Agents are required to keep trust account records. Answer the following.
   1. List the trust account records an agent must keep.
   2. How must the records be kept?
   3. Where are the records to be kept?
   4. What must an agent do at the end of a month with trust account records?

5. Is beneficial for an agency to educate all staff in the requirements of trust accounting?

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6. Regarding trust account withdrawals or disbursement:
   1. What are the requirements for withdrawals from a trust account?
   2. Provide an example of when a withdrawal can be made. 

7. Giving your own response, answer the below questions.
   1. Explain the duties of the agent in relation to trust account audit.
   2. Explain the duties of the auditor in relation to trust account audit.

8. What steps are required if a trust account becomes overdrawn?

9. Regarding documents used in trust accounting…
   1. List source documents used in trust accounting.
   2. What is a journal?
   3. Explain the different types of journals.
   4. Explain the purpose of a ledger account.

10. Explain why it is important the principal of an agency provide staff with clear guidelines for management of trust accounts. You are to provide your own response and reasons for your response.

11. Looking at the processes involved trust accounting:
    1. Discuss possible ways inaccuracies could occur.
    2. Give some ideas as to how an agency could minimise inaccuracies.

12. Trust accounts must be reconciled at the month’s end. Answer the following.
    1. What is ‘reconciling the trust account’?
    2. At a minimum, what is to be included in the reconciliation report?
    3. What does the reconciliation process ensure?
    4. In your opinion, how does reconciliation assist with accuracy of trust account record keeping and accuracy?

13. Review the monthly bank statement and bank reconciliation statement and identify the key components that are required by your State/Territory legislation.

14. What is the impact on client confidence and agency brand resulting from breaches to trust accounts processes and fraudulent activities?

15. Identify a trust accounting software package and describe its role and functions.