Cppdsm 4006A Assesssment C1 PDF

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Assignment of Chapter 1 from the textbook...

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CPPDSM4006A

Establish and manage agency trust accounts

Name: Date:

Chapter 1 Activity 1 – pg 5 Activity 2 – pg 16 Check your learning questions 1 – 15 on pg 22

Activity 1 Go to www.consumer.vic.gov.au and locate the form for opening and closing a trust account. This is Notice of closing a trust account ( myCAV), Notice of openging a trust account ( myCAV) under https://www.consumer.vic.gov.au/resources-and-tools/forms-andpublications

Activity 2 From the scenarios listed below, determine if the funds referred to are trust money or not. Yes

1

2

No

P

P

P

3

Legislation

Reason

Estate Agents (general,

Funds received from client prior to

Accounts

Audit)

outlay - hold in trust until money

Regulations - Regulation

spent and invoice received for

10

payment.

Estate Agents (general,

Funds received on behalf of the

Accounts

Audit)

principal of the agency - hold in

Regulations - Regulation

trust until money paid to the

10

principal.

Estate Agents (general,

As this painting already carried

Accounts

Audit)

out, the money should be paid to

Regulations - Regulation

me who has managed on behalf

10

of the landlord

and

and

and

Estate Agents (general, 4

P

Accounts

and

Audit)

Regulations - Regulation

Commission is the money the agency is entitled to receive them

10 5

P

Estate Agents (general,

Funds received from client prior to

Accounts

further actions according to the

and

Audit)

CPPDSM4006A

Establish and manage agency trust accounts

Regulations - Regulation

agreement between your agency

10

and the other agency.

Chapter 1 Learning questions

1. What is trust money? Money received by an estate agent as a stakeholder or on behalf of another person ( principal or third party). It must be paid into the estate agent’s trust account in an approved financial institution and recorded in the agency trust accounting records.

2. Does trust money belong to the agent or agency? No. It is money received by an estate agent as a stakeholder or on behalf of another person ( principal or third party).

3. Can an agent or agency use trust money to run their business? No.

4. Who is ultimately responsible for trust money? Agency principal’s responsibility.

5. What is the difference between a trust account and a general operating account? An agent does not have to notify anyone about the existence of a general business account. The funds held in the general business account are for the use of the agency, to be recorded as income and operating costs and reported as required by the ATO. The Estate Agents Act is concerned with trust money that must be deposited in a trust account with an approved financial institution and audited annually. 6. Can trust money be deposited into an agency’s general operating account? No.

7. What is a trust account? The trust money held on behalf o the vendor or landlord must be kept in an account that is separate from the agency’s everyday business operating accounts. This account is known as the trust account. 8. What is the role of an auditor in the agency’s management of trust money?

CPPDSM4006A

Establish and manage agency trust accounts

The role of auditor is to confirm that the money held in trust is accurately accounted for and managed by the agency.

9. What are the requirements for notifying CAV if setting up a new trust account? Under setion 59(7)(a) of the Estate Agents Act, within 14 days of setting up a trust account, the agency must notify CAV in writing of the account details including the name, number and the address and branch of the approved AFI where the account is held.

10. What is trust accounting? Trust accounting is the term used for the system of recording and managing trust money to meet legislative requirements.

11. List the documents and records that must be maintained for every trust account. Documents: Trust receipts, trust receipts register, trust account deposit forms, trust cheques, trust cheques register, register of securities, trust account journals, trust account ledgers, trust account reconciliation statement Records: Show for whom the money is held, show details of every transaction, show the date of the transactions, be in English and in a form that can be read and converted into printed format, be recorded by the end of the next business day after the transaction has occurred, balance at the end of the month, be securely stored, be able to be audited and available to an auditor during regular trust audits.

12. What are the requirements for depositing trust money? Under the Estate Agents Act, all trust money received must be paid into the trust account before the end of the next business day. The only exception to this is that, if the agency is located more than 16 km away from the AFI, the agency has until the end of the third business day after the date of receipt to deposit the funds.

13. What are the special requirements for depositing residential bonds and retail bonds? Residential bonds: Residential bonds are not generally banked by the agency. Instead, it is payable to the RTBA. As the agency is not banking the bond cheque directly to the trust account, it is not required to issue the tenant a trust receipt.

CPPDSM4006A

Establish and manage agency trust accounts

If, however, the tenant a single amount and is unable or unwilling to give he agency separate cheques, the agency should accept the payment and issue a trust receipt for the full amount. The payment should then be paid to the trust account in the usual way and a trust cheque drawn for the bond amount. This must be forwarded to the RTBA, with the bond lodgement forms, within 10 business days. Retail bonds: The process for accepting and banking retail bonds is the same as that for residential trust money. There are two main differences between retail and residential bonds. The first is that interest earned on residential trust accounts is remitted to CAV, whereas interest on retail trust accounts is remitted to the tenanct. The second is that retail bonds are not lodged with RTBA. Instead, they are managed by the agency.

14. How often should a reconciliation of the AFI trust account be performed? Monthly. 15. For how long must trust documents be retained? At least 7 years from the date of its creation....