4005 written

.docx

School

Academy of Real Estate *

*We aren’t endorsed by this school

Course

CPPREP4105

Subject

Accounting

Date

Feb 20, 2024

Type

docx

Pages

Uploaded by AdmiralPowerWhale26

Written Questions Please download this file to your computer and open with MS Word to ensure the formatting displays correctly and allows input of answers. What you need to do: Answer the questions below by writing in the space provided. You are required to answer all questions correctly. If correct, you will see ‘Satisfactory’ or if incorrect you will see ‘Not Satisfactory’ in your grades section of your learner portal next to the assessment name. The assessor will provide feedback and a Record of Results in the assessment task once graded. You will be required to resubmit your work for any ‘Not Satisfactory’ assessment tasks. What you will need: Use the learner material provided in your online student portal as well as research materials such as books, internet, magazines, workplace documentation etc. to assist you in gaining the knowledge required to answer the questions. Remember that the assessment is completely self-paced and open book, so you are able to use whatever resources you have to answer the questions. What you need to submit: Your answers to these questions. How to Submit your Assessment: Upload your completed document into your learner portal as per the instructions with the assessment task. You can drag and drop the file into the window or use the add file icon in the top left of the submission window and select the file you wish to upload by using the browse/choose file option. Click on “finish attempt” to submit it for grading. Written Questions

Question 1 1.1 What is the name of the relevant legislation (including sections if applicable) in your state/territory that outlines the requirements for operating a real estate trust account? In Queensland dedicated legislation has been developed to cover all elements of trust accounting. These are the Agents Financial Administration Act 2014 and Regulaltion 2014. 1.2 Research and list the sections of the legislation relevant to the following areas of trust accounting: Part Division (if applicable) Section/Clause Receipts 2 2 6 to 10 Banking 2 3 12 Payments 2 3 13,14 Cashbook 2 4 15,16 Ledgers 2 5 19 to 21 Reconciliation s 2 4 17,18 Question 2 List 5 examples of transactions that would NOT be entered into a trust account accounting system. (e.g. payment of wages to office staff). 1. Payments of wages to office state. 2. Administration Expense including stationary. 3. Payment of office rent, utilities bill for the Office. 4. Vehicle and Phone related to the office staff, property managers, real estate agents. 5. Payment related to the office like insurances.

Question 3 Complete the following table. Give (2) reasons that inaccuracies/discrepancies can occur in trust accounts and a treatment to address these. Source of Discrepancy Treatment Strategy to Address the Discrepancy E.g. Dishonoured cheque • Ensure that a reversal is completed in the cashbook • Do not accept cheques as method of payment Rent allocated to the wrong property • Ensure that the reversal of the transaction is cpmpleted • Re-enter the rent to the correct property Funds allocated to the wrong account (Bonds, rent) with references • Ensure that the reversal of the transaction is completed • Ask the property manager the transaction was for? • Re-enter the funds to the correct account Question 4 List (4) transactions you are likely to be handling on behalf of your clients / Principals and group the transactions according to whether they are a receipt or a payment. Receipts Payments e.g. Rent paid into the agency from tenant e.g. Rent Payment to Landlord at the end of the month 1. Rent paid into the agency from tenant Rent Payment to Landlord at the End of the Month 2. Bond paid into the agency from tenant Bond payment to the RTA in the same week 3. Bond Refund into the agency from the RTA After claiming end of tenancy charges, Bond payment to the tenant at the end of the month 4. Utilities paid into the agency from tenant Utilities payment to the supplier at the End of the month Question 5 What is the purpose of trust accounts in real estate? Trust Accounts are specific forms of bank accounts that must be used by professionals whose services require them to hold money in 'trust' for their clients. Accountants, Real Estate Agents, and Solicitors are examples of professionals that may be required to operate a Trust Account in order to facilitate transactoions on

half of their clients. Question 6 What are the requirements under the legislation in relation to being able to operate a real estate trust account? In Queensland dedicated legislation has been developed to cover all elements of trust accounting. These are the Agents Financial Administration Act 2014 and Regulation 2014. Managing a trust accout include Common Law principles and the fiduciary duties and responsibilities between the agent (or agency) and the principal (client), whereby an agent • Take such care in keeping safe money of the principal as a reasonably prudent person would take in caring for their own property or money. • Keep all the monies and property of their principal seperate from their own. • Keep seperate accounts of all dealings on behalf of their principal and to be ready to the principal at any time. Question 7 What is the difference between a trust account and a general account? Trust Account: You must pay trust money into a trust account related to the Property, Tenant or Owner General Account: Non-trust monies are amounts you recieve that are unrealted to acting as an agent. Usually, non-trust money must be paid into a generl account, but there are some circumstances where it can be paid into a trust account. Question 8 Explain the roles and responsibilities of the real estate personnel regarding the trust account activities listed below. (e.g. who can and cannot perform these functions). • Receipting rent from a tenant • Ending of month disbursement of funds to the landlord • Receipting deposit from a purchase • Problems with the trust account

• Issue a cheque for the balance of funds at settlement of a property. A person who got the Real Estate Licence and has the responsibility to manage these transactions related to properties can perform these functions. Apart no one is allowed in the office to get an excess for trust account. Question 9 Refer to the relevant legislation and outline the responsibilities of the licensee relating to account transactions and audits. (Refer to the correct section of legislation as part of your answer.) Agents Financial Administration Act 2014 - Division 3, Part 3, Section 36 (a) to inspct and audit, in each audit period, the trust accounts of each agent by whom the auditor is engaged. (b) to make an audit report for the agent for the audit period. (c) if the agent for thw whole of the audit period-to make 2 unnannounced examinations of the agent's trust accounts during he audit period. (d) if the agent is an agent for less than the wole audit period, but more then 6 months of the period-to make 1 unannounced examination of the agent's trust accounts during the audit period

Question 10 Read the following case and explain the impacts of trust inaccuracies/discrepancies on clients and agency. The regulator received a complaint in March 2018 alleging irregularities in the agency’s trust account. It undertook a compliance check at the agency’s business address in March 2018, which revealed the agency’s then Principal Licensee had withdrawn a total of $ 121,000 on eleven separate occasions without authorisation. The then Principal Licensee of the agency cooperated with the regulator and admitted the funds transferred from the trust account were never intended for personal gain, but were used as a “short term loan” to cover business expenses until money could be returned to the trust account. The agency’s clients suffered no loss as a result of the trust account misappropriation. In sentencing, the court stated the offending was of a very serious matter, but considered a number of mitigating circumstances including an early guilty plea, the cooperation with the regulator and no loss experience by consumers. The impacts of trust inaccuracies/discrepancies on clients - Agency lose the trust and business from that client, lose their funds. The impacts of trust inaccuracies/discrepancies on agency can lose their licence and can face severe penalties including heavy fines and even imprisionment, defaming and spoil their reputation in the market. Question 11 In 200 – 300 words, outline the monthly trust accounting processes required to be undertaken by the real estate agency (including the applicable timeframes) in line with legislation requirements in your state or territory. The processes undertaken each month that ensure compliance with agency and statutory requirements regarding the accuracy of trust records are:

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version