Account principles and procedures Flashcards
(24 cards)
True or False: RICS provides guidance on the management of client accounts.
True
What is the primary purpose of client accounts according to RICS?
To hold client money securely and manage it according to client instructions.
Fill in the blank: RICS requires that all client accounts are __________.
separate from the firm’s own accounts
What is one key principle RICS emphasizes for client accounts?
Transparency in financial dealings
Multiple Choice: Which of the following is a requirement for client accounts as per RICS? A) Monthly reconciliations B) Annual audits C) Quarterly reports
A) Monthly reconciliations
What must firms do if they receive funds that are not intended for client accounts?
Return those funds immediately to the sender.
True or False: RICS allows firms to use client funds for their operational expenses.
False
What should a firm do in the event of a discrepancy in client account records?
Investigate the discrepancy immediately and rectify it.
What is the consequence of not adhering to RICS guidelines for client accounts?
Potential disciplinary action and loss of RICS membership.
True or False: RICS accounting principles are only applicable to the UK.
False
Fill in the blank: RICS accounting principles aim to provide __________ in financial reporting.
transparency
Which principle emphasizes the importance of consistency in financial statements?
The consistency principle
What is the primary purpose of RICS accounting principles?
To ensure accuracy and transparency in financial reporting.
Multiple Choice: Which of the following is NOT a RICS accounting principle? A) Prudence B) Going Concern C) Revenue Recognition D) Profit Maximization
D) Profit Maximization
What is the ‘going concern’ principle in RICS accounting?
It assumes that an entity will continue to operate for the foreseeable future.
True or False: RICS accounting principles only apply to real estate transactions.
False
Name one key benefit of adhering to RICS accounting principles.
Improved reliability of financial statements.
What does the prudence principle entail in RICS accounting?
It requires that revenues and profits are not overstated and expenses are not understated.
What is the minimum limit of professional indemnity insurance need base on turnover!
Up to £100K - £250K
Up to £200K - £500K
Over £200K - £1 million
What might be a red flag for money laundering?
Large cash transactions, parties changing their names mid transaction
Tell me what you know about financial sanction for lettings agents.
From 14 May 2025, letting agents will be subject to these reporting obligations as they will be added to the list of “relevant firms” under financial sanctions regulations.
The reporting obligations will apply in relation to letting agency work irrespective of the value of any rental agreement.
How have you applied the new financial sanction regulation?
Key Compliance Requirements for Letting Agents
Mandatory Screening of Clients
Letting agents must screen all prospective landlords, tenants, guarantors, and other relevant parties against the UK’s consolidated financial sanctions list before entering into tenancy agreements or accepting payments. This screening should be conducted regularly, as the sanctions list is frequently updated.
Enhanced Due Diligence
Agents are required to verify the identities of all parties involved using official documentation, such as passports or driving licences. They must also maintain detailed records of these checks, including dates and outcomes, for a minimum of five years.
Reporting Obligations
If an agent knows or has reasonable cause to suspect that a person is designated under financial sanctions, has breached a prohibition, or failed to comply with an obligation under sanctions regulations, they must report this to OFSI immediately. Reports should be submitted using the Compliance Reporting Form and sent to [emailprotected]
Record-Keeping
Agents must keep comprehensive records of all compliance-related activities, including identity verifications, sanctions screenings, and any reports made to OFSI. These records must be retained for at least five years.
Staff Training
It is essential for all staff members involved in client onboarding and tenancy agreements to be trained on the new regulations. This includes understanding how to conduct sanctions checks, identify potential matches, and the procedures for reporting to OFSI.
What are the Consequences of Non-Compliance of the financial sanction?
Substantial Fines: Unlimited financial penalties may be imposed on businesses that fail to comply.
Criminal Prosecution: Individuals responsible for breaches may face imprisonment for up to seven years.
Creditsafe
Reputational Damage: Non-compliance can lead to significant harm to an agency’s reputation and client trust
What Steps do you take to Ensure Compliance?
Implement Robust Screening Processes: Utilize up-to-date databases or digital platforms to conduct thorough sanctions checks on all relevant parties.
Develop Internal Policies and Procedures: Establish clear guidelines for identifying and handling potential financial sanctions breaches.
Provide Regular Staff Training: Ensure all employees are informed about the regulations and understand their responsibilities.
Stay Informed: Regularly check OFSI’s updates and guidance to remain compliant with any changes in the regulations.
For further information and resources, agents can refer to the official financial sanctions guidance provided by OFSI.
If you require assistance in implementing these compliance measures or have specific questions about the regulations, feel free to ask.
