Electronic records and trust account compliance

When an agent uses a computerised accounting system to manage trust account records, the system must meet all requirements set out in legislation.

Hard copy records – What must be printed?

Under section 4 of the Agents Financial Administration Regulation, where a computerised system is used to maintain trust ledger accounts or prepare trust account cash book reconciliations, agents are required to produce a hard copy of the reconciliation within five business days after the end of each calendar month with the following information:

• if the agent uses the system to keep a trust ledger account — the balance of the trust ledger account;
  
  
• if the agent uses the system to prepare a trust account cash book reconciliation — the reconciliation completed under section 17(1)(a);
  
  
• if the agent uses the system to reconcile a trust account financial institution statement balance with the trust account cash book balance — the reconciliation completed under section 17(1)(b).

Section 4 (5) also states that before deleting any trust ledger or investment ledger account, the principal agent must:

1. print a hard copy of the account; and
2. keep that hard copy in the principal agent’s records. 

Acceptable forms of electronic storage

Section 27 of the Agents Financial Administration Regulation sets standards for storing documents electronically. Where a required document is kept in electronic form, the principal agent must ensure:

• the computer system has sufficient capacity and backup capability
• backups occur at least monthly
• backed‑up information is stored away from the business premises and protected from magnetic or other damage

In addition, section 4(2) requires that:

• a trust ledger account cannot be deleted unless its balance is zero and a record is kept of the account immediately before deletion
• any amendment to a transaction must be recorded as a separate transaction
• all system‑generated records must appear in chronological sequence

Section 4(3) further requires the system to keep a chronological record of any changes to:

• the name or address of a person for whom trust money is held
• descriptions of matters being conducted
• the amount of trust money held for any person by the principal agent
• the trust account’s financial institution account number

Requirements for computerised accounting systems

An agent’s computerised accounting system must:

• prevent deletion of a trust ledger account unless the balance is zero and a record is preserved
• record amendments as separate transactions (ie, the original transaction and the amendment will both be recorded on the system)
• produce all records in chronological order

While computerised systems can simplify compliance, many general accounting or spreadsheet programs allow unauthorised edits or deletions that do not comply with the legislation. Careful selection and management of software is therefore essential.

Regardless of the system used, the agent is responsible for ensuring records remain accurate, current, and compliant.

All receipts must be entered into the trust account cash book within two business days of the transaction.

Agents must keep a duplicate copy of each receipt for at least five years. If the receipt is not produced in hard copy, it must be retained electronically for the same period.

Legislation reference:

Agents Financial Administration Regulation 2014 – Sections 3, 4, 26 and 27.

Agencies needing further information can refer to the OFT website or their legal advisor.

REIQ members with agency practice or property management questions can contact our advisory services via ask@reiq.com.au or at 1300 697 347. 

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Disclaimer: This article is provided for information purposes only and does not constitute legal advice and should not be used as such. REIQ cannot and does not warrant and nor does it represent in any way that the information contained herein is current and/or will remain current beyond the time and date of release.