Formative Assessment Qs 31 - 40

Question 1

In relation to the trust account bank reconciliation, what is an “Outstanding Payment”?

Answer 1

A payment that has been issued from the trust account and the recipient has not presented the cheque to their bank, or the cheque or EFT has not been processed by the bank, and the payment has not appeared on the trust bank statement.

Question 2

In relation to the trust account bank reconciliation, what is an “Outstanding Deposit”?

Answer 2

Monies received by the agency, processed in the trust account cashbook and ledgers but not yet presented on the bank statement for the trust account, because they have not yet been banked or the bank has not yet processed the deposit.

Question 3

List the possible causes of discrepancies when doing the banking

Answer 3

Receipting error
Not enough cash
Too much cash
Extra Cheque
Bank fees

Question 4

What policies and procedures would be in place for identifying and reporting discrepancies?

Answer 4

• Same person does not do the banking every day
• Property managers and senior office administrators disburse funds under the supervision of the OIEC/Principal Agent
• Ensuring that a single staff member does not disburse funds without some form of crosschecking
• Create a daily report of trust account activities and that the OIEC/Principal Agent personally checks this report for discrepancies and errors

Question 5

List two ways that you could identify a discrepancy in the trust account.

Answer 5

• Bank reconciliation

- Audit

Question 6

What risk management practises, systems and procedures should an agent have in place to protect the trust account?

Answer 6

• More than one person responsible for the trust account operations – division of duties for receipting, banking, reconciling, etc.
• Computer passwords should be kept private and not shared with other staff members – this should be monitored by the office administrator or principal.
• OIEC/Principal Agent should oversee the operations and actively check reports and reconciliations to verify outstanding amounts and transactions.
• Bond lodgement amounts should be verified with RTBA
• Computer Backups should be kept off-site.
• Have more than one signatory on cheque account/authority for EFT transactions.

Question 7

What is a trust cash receipt journal?

Answer 7

A record of all deposit transactions in chronological order received into the Trust Account.

Question 8

What is a trust cash payments journal?

Answer 8

A record of all payments/debits in chronological order processed through the Trust Account

Question 9

The computer printing phase of the end of month procedure produces which six trust records?

Answer 9

Journals
Ledgers
Trial balance
General account profit/loss
Reconciliation
Cheques / payments

Question 10

What is a trust ledger?

Answer 10

A record of all deposit transactions in chronological order received into the Trust Account.