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

Regular monitoring of trust account transactions and account balances may help prevent the
successful fraudulent transfer of money from a trust account, as the bank may be in time to hold or
reverse the transaction. Agents should ensure they only access their banking details in a secure
environment and all devices have appropriate and up-to-date security software.
In preparing a bank reconciliation, which is a major part of a trust account reconciliation, the agent
should be aware that while the bank also records cash receipts and cash payments, the bank
records it from a different perspective to that of an agent. For example, cash receipts that are
debits in the agent’s ‘cash at bank account’ entries in the journal are shown as credits on the bank
statement. Similarly, cash payments appearing as credits in the ‘cash at bank account’ entries in
the agent’s journal are shown as debits on the bank statement.
Often, there will be discrepancies between the trust records and the bank statement. Once the
agent becomes familiar with these discrepancies, the process of trust account reconciliation
becomes easier.The procedure for preparing a bank account reconciliation is as follows:
• Add the cash column (total) of the cash receipt journal for the particular month (eg March).
• Add the cash column (total) of the cash payments journal for the particular month (eg March).
• Read the bank statement for the particular month (eg March) and check that the money
deposited each day went into the bank account. These amounts will be entered as credits on
the bank statement.
• Check all the cheques drawn appear in the bank statement and they are all for the same
amount. These amounts will be shown as debit entries. Check also that all cheques appearing
in the bank statement were in fact authorised and issued.
• Using a pencil, tick off each entry on the bank statement against the corresponding entry in
the cash journals. Items appearing in the bank statement but not in the cash journal could be a
direct deposit. The agent should deal with a direct deposit by issuing a receipt and completing
the details of the receipt, ensuring the date the deposit was actually credited to the account is
shown on the receipt. The agent should enter this information into the cash receipts journal and
credit the appropriate client trust ledger account.
• Deposits not ticked in the cash receipts journal represent outstanding deposits and will be used
later in the bank reconciliation statement.
• Cheques appearing in the cash payment journal that have not been ticked are referred to as
‘unpresented cheques’ and will be used in the preparation of a bank reconciliation statement.
The balance of the bank statement and trust cash at bank ledger (or balance as per trust cash
journal) should be the same after making adjustments for outstanding deposits and unpresented
cheques. If they do not, an error has been made and will need to be identified.
Agents should check:
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• additions;
• all entries from receipts to the cash receipts journal;
• all entries from cheque butts into the cash payments journal;
• all unpresented cheques have been added together correctly;
• all outstanding deposits, including electronic transfers, have been accounted for; and
• the bank statement for any bank charges that may have been debited to the trust bank account.
SETTLEMENT AGENTS’ TRUST ACCOUNT HANDBOOK