With recent cases of trust account fraud resulting in fines and suspended jail sentences, one expert warns about relying too heavily on technology for this specialised agent function.
Jane Morgan, director of End of Month Angels, said that while software is vital in trust accounting, many don’t meet regulatory requirements, such as needing a separate bond ledger in Western Australia.
“Lots of software claims to be ‘Fair Trading approved’ or ‘REI certified’, but these organisations would never put their name to something they can’t be certain of; agents should ask [software companies] to prove their certifications,” she told RPM.
“Software companies don’t always keep on top of changes to the legislation. For example, when the need for trust account registration came into effect in NSW, many software companies were unaware of this and some of them still haven’t allowed for the ability to enter the UID into the software.”
Ms Morgan said that in most trust account software, too many things can be manually changed or altered, and some even allow ledgers to fall into negative, which goes against every state’s regulations.
“The software provides generic stationery that isn’t state-specific, so agents could get breaches for something simple as not having the words ‘trust account’ on their receipt.”
According to Ms Morgan, a primary example of why trust account fraud occurs is too much authority is being granted to staff who don’t necessarily need access to every part of the software.
“If you’re ever unsure about whether a software is the right fit, then you should pay your auditor to check over it or ask what his/her thoughts are,” she said.
“Ask the software provider to send through some example reports that you can forward to the auditor and have them check over it.”
Ms Morgan said online bond lodgement will help to minimise trust account fraud, as it removes the need for bonds to be managed in-house by an agent, instead sending the money directly to Fair Trading.
[Related: Director found guilty of trust account fraud]