CPPDSM4006A: Assessment 1 Establish and manage trust accounts

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CPPDSM4006A: Assessment 1 Establish and manage trust accounts

What you have to do

• This unit of competency specifies the outcomes required to establish and manage trust accounts in an agency context. It includes reviewing agency accounts for compliance with trust account requirements, establishing and managing trust accounts, maintaining records of trust transactions, and monitoring and reviewing trust accounts.

• You must complete Part A and Part B.

• Do not submit assignment 2 until you have received a pass result and feedback from your teacher for this assignment.

Using the relevant legislation in your State answer the following questions:

Part A – Knowledge questions

1. Where would a licensee find the legislative requirements to establish and maintain a trust account

2. How does the licensee ensure that the requirements are kept continuously update to date?
3. What policies and procedures could a licensee establish to ensure that their employees understand and comply with the trust accounting requirements and key principals of accounting in their daily practice?

4. When selecting a computerised trust accounting programme for an agency the licensee should ensure that it meets the compliance guidelines. What makes the software compliant in the property industry?

LA022190 Assessment 1, Unit CPPDSM4006A, Ed 3	1
© New South Wales Technical and Further Education Commission, 2017 (TAFE NSW – OTEN), Archive version1, April 2017

5. Identify 2 (two) source documents and explain their purpose in the trust accounting process.

6. What are the 2 methods of withdrawing/disbursing money from a trust account.

7. Who can sign cheques or effect electronic fund transfers from a trust account?

8. How can trust accounting records be maintained so that they can be conveniently and properly audited?

9. How long must trust accounting records be retained?

10. Where must all transfers between accounts be recorded when they are not effected by cheque or electronic funds transfer?

11. What are the licensee’s duties relating to the preparation a trial balance and bank reconciliation in the trust accounting process?

12. How does the licensee ensure the security and confidentiality of their client’s funds?

13. What is the purpose of an audit on the trust account?

14. What are the duties of an auditor in relation to the trust account?

15. How can a licensee keep themselves and agency staff up to date with knowledge and understanding of the relevant legislation for trust accounting?

16. “Agents cannot rely solely on statutory appointed auditors to identify theft and fraud in their agency. Misappropriation can occur well before an annual audit is performed”. What measures or internal controls can a licensee put in place to prevent misappropriation of trust funds?

17. How does the licensee keep clients informed of transactions in the trust account?

2	LA022190 Assessment 1, Unit CPPDSM4006A, Ed 3
	© New South Wales Technical and Further Education Commission, 2017 (TAFE NSW – OTEN), Archive version1, April 2017

Part B – Practical activity

• You have decided to start a property management section in your business ‘Evansdale Realty ‘and are using a manual system until it gets enough clients to purchase a computerised software programme.

• You are to complete the appropriate books of account for the dedicated Property Management trust account to ensure an accurate record of client’s transactions, based on the following scenario:

• Correctly complete the Trust Receipt and Payment Journal (Cashbooks)

• Correctly complete the Trust Ledger and Trust Trial Balance as at 30 May, 2017

• Using the Trust Cash Book and ledger records of Evansdale Realty that you have completed, prepare a Trust Bank Reconciliation so it complies with the Regulations.

You are entitled to assume that the bank statement is correct.

Scenario

• Students to note the following:

• The Trust Cash Book, Trust Ledger, Trust Trial Balance and Bank Reconciliation are to be completed so as to comply with the appropriate legislation in your State.

• The next Trust Receipt Number to be issued is number 101 and the next Trust Cheque number is 710.

• All trust receipts are banked on the day of receipt.

• All receipts and payments are by cheque unless otherwise stated.

• All transactions are GST free unless stated.

• The first client ledger folio number is 110

• Calculate commission on rent received only

May 2017

2^nd  Obtained a new tenant C Moses for M Babbage who paid 2 weeks rent in advance and 4 weeks bond by cheque made payable to agent. Details were:

Bond	$1760
Rent	$880

Received rent from J English on behalf of H Spicer $450 and $150 for water usage.

3^rd   Received rent from the tenant C Risbey for the owner M Babbage $900

LA022190 Assessment 1, Unit CPPDSM4006A, Ed 3	3
© New South Wales Technical and Further Education Commission, 2017 (TAFE NSW – OTEN), Archive version1, April 2017

6th	Received $1000 rent from O Cromwell for Y Burgess
7th	Paid Darkside Plumbing on behalf of M Babbage $160
	Paid outstanding amount due to the Rental Bond Board.
9th	Received $450 rent from J English by direct deposit/EFT for H Spicer.

10^th Obtained a new tenant L Willis for M Babbage who paid a bond (cheque payable to the agent) as well as 2 weeks rent in advance. Details were:

Bond                                                             $2,400

Rent                                                              $1,200

16^th Obtained new tenant K Cross for a new landlord J Bowers. Tenant paid $800 representing 2 weeks rent in advance and $1600 was paid directly to Rental Bonds Online.

17^th  Paid outstanding amount due to Rental Bond Board.

18^th  Paid Metropolitan Water $210 on behalf of H Spicer.

20^th  Paid Spotless $250 for cleaning of unit belonging to M Babbage

21^st Settled with Y Burgess. Property management fees of 7.7% GST inclusive and the balance was paid to landlord.

22^nd Paid Evansdale Newspapers the sum of $940.

23^rd  Received $2000 rent from O Cromwell for Y Burgess

24^th  Received $400 rent from K Cross for J Bowers.

26^th The cheque from K Cross was dishonoured. The tenant agreed to pay cash which was banked today.

30^th  Received rent from Z Varga $1000 by EFT for Y Burgess

30^th Settled the outstanding balance to date with the owners M Babbage, J Bowers and H Spicer. The property management fees are 7.7% including GST calculated on rent received only (do not included money received for other purposes).

4	LA022190 Assessment 1, Unit CPPDSM4006A, Ed 3
	© New South Wales Technical and Further Education Commission, 2017 (TAFE NSW – OTEN), Archive version1, April 2017

The blank forms required for this exercise can be found on a separate document called ‘CPPDSM4006A_Assmt1_Answer_sheet.xls’. Click on tabs at the bottom of the window (i.e. – receipt side of journal, payment side of journal, ledgers & trial balance

• bank reconciliation) to access the relevant worksheet for each task (see diagram below).

Bank statement

Countrywide Bank

Evansdale Realty Property Management Trust Account

	Date			Details			Debit			Credit			Balance
				Balance b/f								Nil
02/05/2017			Deposit				3240.00		3240.00			cr
03/05/2017			Deposit				900.00	4140.00			cr
06/05/2017			Deposit				1000.00		5140.00			cr
07/05/2017		711		1760.00					3380.00			cr
09/05/2017			Deposit				450.00	3830.00			cr
10/05/2017			Deposit				3600.00		7430.00			cr
16/05/2017			Deposit				800.00	8230.00			cr
18/05/2017		712		2400.00					5830.00			cr
18/05/2017		713		210.00				5620.00			cr
21/05/2017		715		77.00				5543.00			cr
21/05/2017		716		923.00				4620.00			cr
23/05/2017			Deposit				2000.00		6620.00			cr
24/05/2017			Deposit				400.00	7020.00			cr
26/05/2017			Dishonour	400.00				6620.00			cr
27/05/2017			Deposit				400.00	7020.00			cr
30/05/2017		717		229.46				6790.54			cr
30/05/2017		718		2340.54					4450.00			cr
30/05/2017		719		69.30				4380.70			cr
30/05/2017		720		770.70				3610.00			cr
30/05/2017		721		92.40				3517.60			cr
30/05/2017		722		1107.60					2410.00			cr

LA022190 Assessment 1, Unit CPPDSM4006A, Ed 3	5
© New South Wales Technical and Further Education Commission, 2017 (TAFE NSW – OTEN), Archive version1, April 2017

Checklist

Before uploading assignment to the OLS, please ensure that you completed the following:

Part A – Knowledge Questions

Part B – Practical activity:

• Receipt side

• Payments side

• Ledgers and trial balance

• Bank reconciliation

If you are unable to complete this task for a specific reason, please contact your teacher to discuss alternative arrangements for demonstrating your skills and knowledge.

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