How to make your trust account audits run more smoothly

Automate your record keeping

Making life easier starts with good record keeping. Using manual processes such as maintaining Excel spreadsheets to track deposits and disbursements can result in a complicated, lengthy audit because the auditor must work through your cashbook and bank statements to identify and match individual transactions. This often translates to more work for you when the auditor asks for copies of receipts and authorities. You can run into further issues if EFT transactions or cheque numbers have been entered into the system incorrectly, or when something bounces back.

Audit Australia Director Lee Dyball says it takes more time to find related transactions when they aren’t processed in a timely manner and documented clearly. “It always works best when you achieve a zero balance at the end of every day,” says Lee. “As soon as you receive a refund from the ATO, process your client refund and fee from refund as soon as is practically possible.”

There are programs and software available to help. Refund Manager, for example, provides easy daily account reconciliation and automatically takes care of record keeping for fee from refund transactions, with unique IDs and reference codes that provide certainty the auditor can effortlessly track activities. “Working with Refund Manager helps,” said Lee. “As a partner firm, we can source details directly from the system, so clients don’t have to search for receipts and find more information.”

Secure authorities ahead of time

A common issue that trust account auditors find is that accountants haven’t secured the required authorities in advance. To act on behalf of a client and to manage cash for them, it’s critical to record their approval at the outset of your relationship. If you’re managing fee from refunds, you must obtain specific approval for that, in addition to your standard letter of engagement.

“With an increase in virtual liaison, rather than in-person meetings, it’s easier to overlook authorities or to lodge transactions before the client has returned their signed approval,” said Lee. “It’s a good idea to review and update your processes to suit the new working environment as well as using your systems to record and indefinitely store authorities for peace of mind.”

Set up your trust accounts for success from the outset

Trust accounts are different to everyday bank accounts, and they must be treated accordingly. When establishing your trust accounts for business, ensure your bank will charge fees against your general account rather than the trust account, which should never be overdrawn. You must also get authority from the bank to handle bulk payments, otherwise your transactions and capabilities will be limited.

Once your trust accounts have been established, you can avoid handling individual payments and manage all your free from refund clients in just two minutes a day by using a service like Refund Manager. Refund Manager CEO Steven Gibson says clients have reduced their fee from refund processing time by up to 90 percent and saved on average $5,750 per annum by simplifying their process. “It’s the only cloud-based software in Australia that eliminates the hassle, high costs, and risks involved with fee from refunds,” said Steve.

Hundreds of accountants are using Refund Manager and more than $1.4 billion worth of refunds have been processed through the system. Watch a free webinar to learn how you can save time and money through Refund Manager.