Audit season can be a stressful period for estate agents, especially given the Covid-induced lockdown regulations and remote working conditions. Not only is it a costly undertaking, but it also requires focused attention from team members, which might divert resources and hinder normal output. Understanding the roles and requirements of your own company, as well as your appointed auditors, can assist in making sure the process is smoother and far less stressful.
So what is your responsibility as an Estate Agent registered with the Estate Agency Affairs Board (EAAB)?
1. You need to provide your auditor with everything they need to complete an audit report in the prescribed format for the trust accounting records.
2. You must ensure that your auditor submits this audit report to the EAAB online before the deadline which is four months after your own financial year-end.
3. You need to ensure that you receive a confirmation email from the EAAB once the audit report for the trust accounting records has been submitted online, so it’s very important that your auditor captures your contact details correctly.
4. In addition to the above, you need to ensure that your annual financial statements (i.e. business accounting records) are prepared and also audited.
The role of the auditor
After your auditor has performed the necessary audit procedures and completed the prescribed audit report for the trust accounting records, he or she needs to submit it to the EAAB online using the MyEAAB Auditors Portal. This has to happen within 4 months of your business’s financial year-end.
In terms of the Estate Agency Affairs Act (EAAA) the auditor is required to audit the trust accounting records as well as the business accounting records.
Therefore the annual financial statements (business accounting records) of the estate agent, as they relate to any legal form of business under which estate agent activities are performed, should be audited annually.
Who must perform the audit of an estate agent?
The audit of estate agents business accounting records and trust accounting records must be performed by a Registered Auditor who is registered with the Independent Regulatory Board for Auditors. Verify your auditor’s registration with the board here
Should the audited financial statements of the business accounting records also be submitted when submitting the auditor’s report on the trust accounting records to the EAAB?
No. Only the auditor’s report on the trust accounting records in the format determined by the EAAB should be submitted by the auditor.
However, in terms of section 32(5) of the Estate Agency Affairs Act, the EAAB may request the audited financial statements of the business accounting records directly from an estate agent.
Can the EAAB grant extensions on the prescribed time frame for submitting auditor’s report on the trust accounting records?
No. The Estate Agency Affairs Act does not give the EAAB any discretion to grant extensions on the prescribed timeframe for submitting an auditor’s report on the trust accounting records, irrespective of reasons.
What are the consequences of submitting the auditor’s report outside the prescribed timeframe?
According to section 27(1)(aA)(i) of the Estate Agency Affairs Act, any estate agent who does not ensure that his / her auditor submits the auditor’s report on the trust accounting records to the EAAB within the prescribed timeframe will be disqualified from being issued with a Fidelity Fund Certificate (FFC) and if the estate agent is in possession of a valid FFC at the time of disqualification, that FFC will be withdrawn and will no longer be of any force and effect.
This disqualification applies not only to the estate agency entity, but also to all principal and non-principal estate agents working under that entity.
Disqualifications may result in charges being instituted against the estate agent and the estate agent may be called to appear before a Disciplinary Committee.
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Look no further, our firm has the necessary knowledge, experience and skills to assist you with all the audit requirements ensuring that you and your estate agency practice remain compliant. Check out our services here and reach out to us on the details below.