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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, and Trust Accounts Regulation 1999 a public accountant who manages client funds is a trustee and must therefore comply with trust account legislation.

A trustee needs to:

  • meet the prescribed requirements of the Trust Accounts Act 1973 and Trust Accounts Regulation 1999
  • report annually to the supervising entity that oversees trust accounts in Queensland, i.e. the Department of Justice and Attorney-General
  • provide other information requested by the supervising entity.

Setting up a trust account

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

Within 14 days of setting up a trust account you must lodge a Form 1 Notification—New trust account. This will let us know that you have become a trustee under the Trust Accounts Act 1973.

Next, you will have to appoint an auditor to your trust account and advise us of the appointment within 30 days. Provide the full name and business address of the auditor, and ask him/her to endorse the appointment. Before appointing an auditor, ensure that they meet the criteria under the Act (see sections 14 and 15).

If your financial institution requires approval from us before setting up a trust account, you can formally request approval from us on business letterhead or by email. We will then write to your bank granting permission.

Use the trust account checklist to assist in setting up a trust account.

Annual reporting on a trust account

The financial period for a trust account is 1 April to 31 March each year. Once a trust account is set up compulsory reporting requirements will need to be met each year.

At the end of the financial period you must provide, at a minimum, the following three pieces of information.

1. Statement of highest amount held in trust

A written statement, witnessed by a Justice of the Peace or Commissioner of 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. The statement can be submitted on business letterhead or on one of the following forms:

2. Financial security

You must lodge a financial security by 14 April each year based on the amount reported in your statement. The maximum required security is $10,000, or one third of the amount declared in your statement (whichever is less).

However, you will be exempt from the need to lodge a financial security if your trust account meets the following conditions:

  • The nature of the business relates solely to income tax returns.
  • The trust funds are paid out by the end of the day to affect a cashbook balance of nil.

For more information, refer to Order Exempting Trustee (Queensland Government Gazette No 21, 24 May 2002).

3. Independent Auditor’s Report

As a trustee, it is your responsibility to submit an auditor’s report for the financial period ending 31 March each year. The audit report must address a prescribed 25 point checklist, set out in Information for Audit Report Schedule, section 23(1) of the Trust Accounts Regulation 1999.

This information also provides a guideline to assist the auditor in addressing all 25 points.

The audit report must be on business letterhead and forwarded to us via post. It is the trustee’s responsibility to ensure that the audit report is completed and lodged with the Department each year.

Changes to a trust account

If changes are made to your trust account, such as a new name, address, or new trustee, we must be advised within 30 days. You can notify us by submitting a Form 2— Maintenance of particulars.

If a trustee resigns, the Department must be notified. Complete a Form 3—Ceased to be a trustee.

Closing a trust account

When a trust account is closed, the trustee must:

  1. Immediately notify the Department of Justice and Attorney-General. A Form 3 Notification can be used. See bottom of the form.
  2. Arrange for a full 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 that period.
  3. Lodge a 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 held by the Department will be returned to its financial institution.

Contact the supervising entity

Address

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

Phone

Phone: (07) 3109 9113 or (07) 3006 2541

Email

trustaccounts@justice.qld.gov.au

Last updated
6 March 2018
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