As the financial year concludes (often running April to March for trust accounts), Tax Practitioners face the essential task of preparing for the trust account audit. Getting your reports in order is key to a smooth assurance engagement.
What Do Auditors Typically Require?
Based on insights from Dinesh Choradiya, CPA, auditors usually need a specific set of reports and samples to conduct their review. Be prepared to provide the following:
Key Report Categories:
- Client Statement / General Ledger: A record of all the receipts and payments or the overall ledger (a sample may suffice).
- Cashbook / Transactions Report: Details of all transactions, importantly including a three-way check (reconciling trust records, cashbook, and bank statements).
- Trial Balance: A summary of balances, specifically broken down by beneficiary. Please note the trial balance produced by business accounting software will not work
- Monthly Bank Reconciliation: Regular confirmation that trust records match bank records.
Essential Letter Samples:
- Signed Authority Letter: Proof of authorisation for transactions, mainly to authorise the tax agent to deduct the fee and this should be signed before the lodgement.
- Refund Letter / Receipt: If it’s a FFR, How refunds were handled showing the trust bank account and client bank account, amount receipted, what was deducted and the net refund with the date and receipt number in a consecutive order.
How TrustEasy simplified Audit?
Getting ready for the statutory trust account audit for the year ending 31st March 2025?
TrustEasy is designed to make this process easier. Our platform allows you to quickly generate the standard reports that auditors typically request. As shown, you can navigate the menu to select and produce each required report efficiently, ensuring you’re well-prepared. Simply put, You can go to the top menu and select each one of these reports that are readily available now:
First two reports, GL and Cashbook are required for the whole year, and you can select the period and export them easily from the relevant area:
Other two reports are on a month-by-month basis so you will need to produce 12 reports for these two categories
Beyond Financial Reports: Supporting Documents for Your Trust Audit
In addition to the core financial reports (like Client Statements, Transaction Reports, Trial Balances, and Bank Reconciliations), auditors often require further evidence. As mentioned earlier, Be prepared, as they may also request:
- Sample Signed Authority Letter: To verify that actions taken on the trust account were properly authorised.
- Sample Refund Letter / Receipt: To see the documentation you provide when processing refunds.
Locating Refund Documents in the System (Likely TrustEasy):
If you need to find a sample refund letter or receipt generated within the system described:
- Navigate to the “.aba file section”.
- This section can usually be found by clicking the second-to-last icon on the left-side menu.
- Within the .aba file section, expand the specific .aba file line item related to the refund.
- You should then be able to access the individual receipt or refund letter associated with that transaction.
It is auto generated to save a substantial amount of time for users and it looks like this:
And the authority letter can be produced by selecting any client and clicking on “Produce Authority Letter” button
The Power of Automation in TrustEasy
One of the key advantages highlighted is that essential audit reports and standard letters (like authority letters or refund receipts) are generated automatically within the system. This “out-of-the-box” functionality means data is pre-filled, saving you valuable time that would otherwise be spent on manual preparation.
⚠️ Top 3 Common Mistakes to Avoid for Smooth Audits
While automation helps, accurate inputs and timely processes are crucial for compliance and correct reporting. Be mindful of these common user errors:
- Incorrect Opening Balances: If opening balances aren’t entered correctly when you begin using the software, it will cause mismatches in your trial balance later. Double-check these initial figures by going to Settings à Enter Opening Balances. Firm Opening balance must match the total of client opening balances!
- Delayed Bank Reconciliations: Bank reconciliations are a strict monthly requirement. Waiting until the end of the month can cause issues. It’s recommended to adopt a more frequent cadence, like weekly or fortnightly, to stay on top of reconciliation tasks.
- Untimely ATO Refund Processing: Processing Australian Taxation Office (ATO) refunds has specific timeframes. These can depend on your governing accounting body and the state you operate in. Ensure you are aware of and adhere to these deadlines.
Need Assistance?
Remember, ensuring you meet all trust requirements is vital. If you have any doubts or questions about compliance or using the software effectively, the TrustEasy support team is trained to help. Please reach out to them for guidance.
