Trust account handbook - Department of Commerce - wa.gov.au

2.8 Buffer account
Agents sometimes maintain a surplus amount within the trust account to absorb any inadvertent
deficiencies that may arise from dishonoured bank cheques or bank charges.
In no circumstances should extra funds be kept in the trust account.
A buffer fund cannot be used to offset bank fees or for any other reason. Agents should clear their
commission or fees account to their general account at least weekly. Consumer Protection strongly
recommends against the practice of retaining commissions and management fees in the trust
account for an extended period of time.
The removal of these excess funds from the trust account is for the benefit of all parties. If an agent
maintains a buffer in a trust account, they will not be aware when the trust account is overdrawn.
This means they are less likely to identify poor trust account management practices or fraud by
employees. The person in bona fide control is responsible for checking each ledger account each
month to determine if specific ledgers are overdrawn and to correct any errors.
2.9 Trust account transfer journal entries
An agent may wish to transfer funds between client trust ledger accounts within the trust ledger.
In this situation, it is not necessary to withdraw the funds from the bank trust account and redeposit
them. Rather, the transfer can be achieved through appropriate client trust ledger account entries
and recorded in the trust account transfer journal.
The role of the trust account transfer journal is to provide a clear audit trail between taking money
from one client ledger and crediting it to another client ledger. The use of a transfer journal is not
compulsory unless transfers are made.
When transferring funds between client ledgers it is important to remember that, in some cases,
an authority in writing will be required from the client concerned (ie the sale of one property and
purchase of another).
The trust account transfer journal must include the following information:
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• the date of transfer;
• the name of the trust ledger account from which the money is transferred;
• the name of the trust ledger account to which the money is transferred;
• a notation or code indicating the purpose for which the money is transferred; and
• the amount of money transferred.
Where more than one trust account is held by an agent, a separate transfer journal must be
maintained for each trust account.
Transfer journal entries equate to both a payment and a receipt of trust money and therefore
must be fully recorded. Explanatory notes for each journal entry should be included. Receipt and
payment transactions should be supported by signed trust documents (receipt forms and cheque
butts). The agent should also sign transfer journal entries as evidence of the agent’s authorisation
of the entry. To reduce the incidence of error or theft, the person in bona fide control should sign off
all entries in the trust account transfer journal.
SETTLEMENT AGENTS’ TRUST ACCOUNT HANDBOOK