Are you selling your management rights business after 1 December 2014?
If so read on as the new Agents Financial Regulations 2014 have increased the audit obligations on managers selling their business.
Division 7, section 23 of the new act stipulates that from 1 December 2014 your trust account auditor must complete a pre settlement audit of the funds in the trust account. This must be done prior to settlement and transfer of the funds to the new owners trust account. Once complete the auditor will provide a management letter to the licensee to confirm pre settlement funds have been audited.
After settlement the auditor will also be required to complete the standard settlement/account close audit. During this audit your final audit report is produced and forwarded with the previous advice to the Office of Fair Trading.
This puts added pressure on the compliance aspect of the settlement transaction. It is now imperative that your auditor is kept informed of any business sales that are likely to occur well before settlement so adequate audit planning can take place.
We have been in recent discussions with the Office of Fair Trading in relation to the new legislation and contrary to some conflicting information in the industry have confirmed with them the application of these new changes for licensees and auditors alike.
If you would like to discuss settlement audits or the implications of the sale of your business please contact our office.