QLD – Accountant’s Trust Accounts

A1 Audits > QLD – Accountant’s Trust Accounts

General information

Accountants who operate a trust account are required to comply with APES 310 Dealing with Client Monies and have their trust accounts examined by an approved auditor annually. In Queensland, accountant’s trust accounts are also covered by the Trust Account Act 1973.

The information below is taken from the following URLs:

https://www.qld.gov.au/law/laws-regulated-industries-and-accountability/money-tax-and-trust-accounts/trust-accounts/role-of-the-trustee-on-accountant-trust-accounts
https://www.qld.gov.au/law/laws-regulated-industries-and-accountability/money-tax-and-trust-accounts/trust-accounts/role-of-the-auditor-on-accountant-trust-accounts

Role of the trustee on accountant trust accounts

A trust account is a business bank account used by a public accountant to hold funds on behalf of clients.

Under the Trust Accounts Act 1973 ( the Act) and Trust Accounts Regulation 1999 (the Regulation), a public accountant who manages client funds is a trustee and must therefore comply with trust account legislation.

A trustee is required to:

meet the prescribed requirements of the Act and the Regulation.
report annually to the entity that oversees trust accounts in Queensland (i.e. the Department of Justice and Attorney-General).
provide other information requested by the department.

Setting up a trust account

Before setting up a trust account with your bank, you need to advise us that you intend to create a new trust account. Also tell us the name and branch of the financial institution where the account will be set up.

If your financial institution needs ourapproval to set up a trust account, we will write to your bank granting permission.

Within 14 days of setting up a trust account, you must lodge a Form 1 – New trust account. This lets us know that you have become a trustee under the Act.

Follow the Form 1A – New trust account checklist.

Appoint auditor within 30 days

You then need to appoint an auditor to the account and advise us of the appointment within 30 days.

Before appointing the auditor, ensure they meet the criteria under the Act—see sections 14 and 15.

Provide the full name and business address of the auditor, and have them endorse their appointment.

Changes to a trust account

If changes are made to your trust account—such as new name, address, or trustee—we must be advised within 30 days.

Notify us by submitting a Form 2 – Maintenance of particulars.

If a trustee resigns, we must be notified using the Form 3 – Cease to be a trustee.

Annual reporting on a trust account

The financial period for a trust account is 1 April to 31 March.

Once a trust account has been set up, there compulsory reporting requirements to be meet each year.

At the end of the financial period you must provide the following 3 pieces of information (at a minimum):

1. Statement of highest amount held in trust
2. Financial security (unless exempted)
3. Independent auditor’s report

An exemption on the financial security requirement applies if your trust account meets the following conditions:

The nature of the business relates solely to income tax returns.
The tax refunds are paid out at the end of each working day to affect a cashbook balance of zero.

1. Statement of highest amount held in trust

A written statement, witnessed by a Justice of the Peace or Commissioner for Declarations, stating the largest amount of money held in your trust account during the previous financial period.

The statement must be lodged with us by 14 April each year. It can be submitted on business letterhead or using one of our maximum cashbook declaration forms.

There is a different form based on whether the security exemption:

applies. Use Form 4A – Section 31.1 Proforma
does not apply. Use Form 4B – Section 31.1 Proforma.

2. Financial security

You must lodge a financial security  by 14 April each year based on the amount reported in your maximum cashbook declaration.

The security is $10,000, or a third of the amount declared in your statement—whichever is less.

However, if you are exempt from lodging a financial security, ensure you use the form 4A to state the highest amount held instead.

For more information, refer to Queensland Government Gazette No 21, 24 May 2002.

3. Independent auditor’s report

As a trustee, it is your responsibility to arrange and submit an independent auditor’s report for the financial period ending 31 March each year.

The audit report must address a 25-point list of prescribed information—use Form 5 – Prescribed Information for Audit Report and refer to section 23(1) of the Regulation.

The audit report must be on the auditor’s business letterhead and sent to us by post or email, although it is the trustee’s responsibility to ensure the audit report is completed and lodged with us by 31 May each year.

Closing a trust account

When a trust account is closed, the trustee must:

immediately submit a Form 6 – Closure of trust account, or advise us on business letterhead
arrange an independent audit of the trust account from the start of the current financial year until the day it was closed, regardless of the number of transactions during the period
lodge the final audit report within 2 months of closing the trust account.

Once you have completed these requirements and all outstanding issues have been resolved, any trust account security we hold will be returned to the issuing financial institution.

Contact us

The supervising entity to the Trust Accounts Act 1973 is:

Internal Audit Unit
Department of Justice and Attorney-General
GPO Box 149
BRISBANE  QLD  4001

Phone: (07) 3738 9202 or (07) 3738 9203

Fax: (07) 3738 9204

Email: trustaccounts@justice.qld.gov.au

Role of the auditor on accountant trust accounts

An auditor appointed by a trustee to audit a trust account has prescribed obligations under the Trust Accounts Act 1973 (the Act).

The reporting period for a trust account is 1 April to 31 March each year.

Qualifications

You must be a qualified auditor under section 15 of the Act and provide details of your qualifications in the annual audit report.

Once you have accepted an appointment, formally notify us on business letterhead or by email.

If you are appointed by a public accountant to audit a trust account, you must:

conduct an unannounced examination of the trust account each financial period
immediately report on crucial matters raised during the examination
prepare an annual audit report for each financial period.

Unannounced examination

Part of your responsibility as an auditor is to perform an unannounced examination during each financial period. The date of the examination must be recorded in the annual audit report.

If you are unable to carry out an unannounced examination, a reason must be provided at the start of the financial period that you are reporting on.

Matters raised

You must immediately report any serious matters that may be in breach of the Act, or otherwise compromises the integrity of the trust account as mentioned in section 17 of the Act.

This report must be made in writing.

Audit report

You must address a 25-point schedule when auditing a trust account and the reports must be submitted on business letterhead.

View the schedule in section 23(1) of the Trust Accounts Regulation 1999 or our Form 5 – Prescribed information for audit report which further explains each point.

All 25 points on the schedule must be completed, otherwise the report cannot be accepted.

Resigning as auditor

You must immediately advise us if you resign as auditor to a trust account by completing a Form 7 – Resignation of auditor or sending a formal letter of notification.

Refer to section 15(9) of the Act.

Contact us

The supervising entity to the Trust Accounts Act 1973 is:

Internal Audit Unit
Department of Justice and Attorney-General
GPO Box 149
BRISBANE  QLD  4001

Phone: (07) 3738 9202 or (07) 3738 9203

Fax: (07) 3738 9204

Email: trustaccounts@justice.qld.gov.au

More information

Trust Accounts Act 1973
Trust Accounts Regulation 1999
Queensland Government Gazette No 21, 24 May 2002 about the financial statement exemption for tax return accounts