The five-year ban of a property manager over trust account fraud has prompted calls from one principal for more frequent and stringent auditing to “weed out” the law-breakers.
Jam Property managing director Loretta Morgan also believes PM principals need to tighten their controls and be across all their firm's transactions, to avoid potential rent roll fraud.
Ms Morgan says that as managing director, while she doesn't always do the banking, only she signs off on it.
“I know how to do my banking, I know how to do my receipting, I know how to do the end-of-month and mid-month accounts and pay all the accounts,” she told Residential Property Manager. “I don’t do it every day – my property manager does it – but I sign off on it and I check it.
“I am the only one that authorises the files to go out. I think it is really important if you are going to be managing a large rent roll that you have the measures in place and a double-checking system, where it is different people all the time, not the same two teamed up checking it.
“You need to have different levels of authorisation – it is common sense – in a perfect world, we would love to trust everyone, but the simple fact is, you can’t,” she added.
Ms Morgan said it is important for the industry to realise that if you have the right systems and double-checks in place, fraud can be avoided.
“Principals that have property managers ripping them off, really, you've got to ask whether they are being diligent with their rent roll or not,” she said.
“Every real estate agent wants to lift the standards of the industry, but we won't be able to unless we weed this stuff out completely.
"There needs to be better training, better systems. There needs to be monitoring of things like trust account auditing systems. Auditing needs to become more frequent and more stringent, with unannounced audits,” she added.
Ireviloution managing director Jo-Anne Oliveri said considering the volume of rent receipting taking place across Australia every day, trust account fraud is a rarity. Yet she still sees 'unacceptable' practices that leave PM firms vulnerable.
“Even though it is a small minority who steal and manipulate trust accounts, it’s one too many,” she told Residential Property Manager,
“One of the common mistakes I see occurring is tenants' rental payments being receipted to the wrong tenant and then being disbursed to the wrong owner – innocent enough, but totally unacceptable."
Ms Oliveri said any reported trust account fraud or misappropriation of funds tarnishes the industry.
“It mostly has the potential to destroy the agency's reputation where the fraud occurred,” she said.
“It concerns me that in an effort to protect a brand, principals have taken their own action by terminating the employment of the perpetrator.
“Worse still, they have not reported the incident and, out of fear of retribution, this person has continued to work in the industry, because the principal supplies a letter of referral and will not advise the prospective new employer that the person was terminated for fraud or breach of trust account.
“This is where we have a real problem that must be addressed."