CPPREP4005- Prepare to Work With Real Estate Trust Accounts Assessment 2022

CPPREP4005 - Prepare to work with real estate trust accounts (Release 1)
Assessment Questions
RTO 32426
CPPREP4005 - Prepare to work with real estate trust accounts (Release 1)

What you need to do:
Answer the questions below by writing in the space provided.
You are required to answer all questions correctly. If incorrect answers are provided, you will
receive feedback in your 'grades' section, and you will require to resubmit your work.
What you will need:
Research materials such as books, internet, magazines, workplace documentation, etc. Access
to legislative and regulatory documentation.
What you need to submit:
Your answers to these questions.
CPPREP4005 - Prepare to work with real estate trust accounts (Release 1)

Assessment Questions
Question 1
What is the name of the relevant legislation (including sections if applicable) in your
state/territory that outlines the requirements for operating a real estate trust account?
Trust account gets legislated under the PSBA Act 2002, and the following are the
legislation that should be followed while operating. For instance, the Opening trust account
will include the responsibilities of the licensee and financial institution. Also, there are
operation and maintenance of the Trust Accounts with all record which are included. Also,
there is reviewing and monitoring Trust Accounts.
Question 2
List 5 examples of transactions that would NOT be entered into a trust account accounting
system. (e.g., payment of wages to office staff).
1.Payment of the bills
2. purchases
3.Unclaimed money
4. payment of the receipts
Five sales of unrelated property
Question 3
Complete the following table.
Give (2) reasons that inaccuracies/discrepancies can occur in trust accounts and a treatment to
address these.
Source of Discrepancy Treatment Strategy to Address the Discrepancy
E.g., Dishonoured cheque  Ensure that a reversal is completed in the
cashbook
 Do not accept cheques as a method of payment
Lack of adequate backup Ensure that a document accompanies all transactions.
Make use of the software system, which facilitates the
backup of the document.
Misallocating trust funds Adopts use systems that are configured to collects
CPPREP4005 - Prepare to work with real estate trust accounts (Release 1)

misallocated funds.
Use conveyor systems, which will include many users for
approval to help treat the misallocation of funds.
Question 4
List (4) transactions you are likely to be handling on behalf of your clients / Principals and
group the transactions according to whether they are a receipt or a payment.
Receipts Payments
e.g., Rent e.g., Rent settlementsettlement
Note payables Note settlement
Purchases Cheque settlement
Miscellaneous Miscellaneous settlementsettlement
Invoices Invoices clearance
Question 5
What is the purpose of trust accounts in real estate?
A trust account is a specific account that a trusted company or bank holds where they act
on behalf of the principals/ clients. The account helps to hold funds for particular purposes.
For instance, it is used to pay taxes that relate to property and or other insurance payments,
which are associated with the forfeited property. There is a stringent measure set to ensure
there is effective management of trust funds.
Question 6
What are the requirements under the legislation about being able to operate a real estate trust
account?
The trust fund is regulated by law, and there are some requirements for real estate agencies.
For instance, there should be audit and accounting requirements before the account can be
operated. Another requirement is that all the client fund should be kept separate with other
funds which relate to the business.
Question 7
What is the difference between a trust account and a general account?
CPPREP4005 - Prepare to work with real estate trust accounts (Release 1)

There exist some differences between trust and general account. For instance, in the
general account, it can be used to record any unrecorded transactions in the business. In
contrast, in trust, it only records the specific transaction on behalf of the principal. Also,
the general account is used for the general purpose of reporting. In contrast, the trust
account is used for the specific transaction, which includes payment of property taxes and
or other insurance premiums.
Question 8
Explain the roles and responsibilities of the following real estate personnel regarding trust
account activities.
Trust Account Activity Personnel Responsible
Receipting Rent from the tenant Real estate agent
End of month disbursement of funds to the
landlord
Real estate agent
Receipting deposit from the purchaser Accountants
Problem with trust account Solicitor
Issue cheque for balance deposit at
settlement
Real Estate agent
Question 9
Refer to the relevant legislation and outline the responsibilities of the licensee relating to
account transactions and audits. Refer to the correct section of legislation as part of your
answer.
As per PSBA Regulations 2014(clause 26), the licensee should ensure that all the
transaction which occurs in the office are recorded in sequential order in cash under cash
payments or cash receipts. In addition to that, he should also deal with all unclaimed trust
money and also dishonoured cheques. On the other hand, according to PSBA regulation
section 111, the licensee should submit an audit of their trust account. The audited report
should be ledged with the OFT by the licensee by 30th September of each year. Also, the
licensee should retain the audit reports for a minimum period of 3 years.
Question 10
Read the following case and explain the impacts of trust inaccuracies on clients and agencies.
CPPREP4005 - Prepare to work with real estate trust accounts (Release 1)
The OFT received a complaint in March 2018 alleging irregularities in the agency’s
corporate trust account. The OFT undertook a compliance check at the agency’s
business address in March 2018, which revealed the agency’s then Principal
Licensee had withdrawn a total of $121,000 on eleven separate occasions without

A Trust account is an account that is operated on behalf of the principal needs to be
operated with a high level of accuracy and openness and reduce any form of discrepancies.
It's evident there was a misappropriation of the funds by the agency, and this would create
the issues of mistrust between the clients and the agency. There is a clear legal requirement
that has been defined to regulate the Trust account should be operated in line with the
regulation to ensure there are accuracies and trust.
Question 11
In 100 – 200 words, outline the monthly trust accounting processes required to be undertaken
by the real estate agency (including the applicable timeframes) in line with legislation
requirements in your state or territory.
There are key activities that are undertaken daily when it comes to the trust account. Here
is a brief overview of the continuous process which is undertaken in the trust account. Each
of the transactions which involve the trust account should be noted and also recorded by
identifying all the financial transaction from all the relevant sources document which
would supports. All the transactions are successfully recorded in the accounting systems
and the relevant posting of the entries to the ledgers which are involved. After that, all the
procedures are adequately followed to ensure that it's accurate and also efficient, and after
this, the extraction of the trial balance should follow. There are some key details which one
should consider including in every transaction which gets recorded, which is the cheque
number, date, and also the name of the payee. All these details are essential since they are
backup details.
CPPREP4005 - Prepare to work with real estate trust accounts (Release 1)

Question 12
List the name(s) and explain the different types of trust account(s) that can be used in real
estate in your state/territory?
Trust deposit account
It's one of the types of the trust account, which is used for the deposits only according to
PSBA regulations 2014(clause 25). All the deposits are made into the licensee's trust
accounts.
A revocable living trust,
It's another type of account that is also regulated by PSBA Regulations 2014 and is used
for estate planning since it does not go through probate once a person dies.
Question 13
What processes need to get implemented, and authorities notified of discrepancies in trust
accounting?
In the case there are discrepancies which are reported in the trust account, it would be
identified during the auditing, and the relevant people in the agencies should address it in
the best way possible. Office of Fair Trading will ensure all the discrepancies and issues
which relate to the account have been resolved effectively.
Question 14
What security arrangements need to be in place for trust accounts?
Trust accounts need security arrangements from the deposit to the management of the
fund. For instance, all the deposits made into the licensee account must be made a trust
deposit account except the direct deposits. In addition to that, all the trust money must
always be banked before the end of the next day business to ensure there is maximum
security .according to PSBA Regulations 2014.
CPPREP4005 - Prepare to work with real estate trust accounts (Release 1)

Question 15
What are (3) examples of trust records?
Details of money to be received on behalf of the client
Receipt books registers
Trust account journals
Trust ledgers
Question 16
What are the requirements under the legislation relating to the electronic/computer-based
accounting systems? As part of your answer, identify the section of the legislation and the
specific requirements. Any information direction for the legislation can be copy and paste as
part of your answer.
All the transaction which are undertaken should be recorded either manually or
electronically. According to PSBA regulations 2014, all the transaction should be recorded
with all the details and amount which have been banked. In addition to all the money
should be deposited in the respective licensee accounts for easy identification.
CPPREP4005 - Prepare to work with real estate trust accounts (Release 1)

Question 17
In 25-100 words, explain what role you will be going into and what are the legislative
requirements/limitations regarding your involvement in trust account activities.
Trust account is regulated with legislation to open and also the involvement of other
activities in the account. For instance, the receipts for Trust money are regulated under
PSBA Regulations 2014, which helps to ensure all the money is issued from the trust
receipt book.
Question 18
What are the legislative requirements about;
a) Issuing receipts
The issuance of the receipts gets regulated under the PSBA regulations 2014, which is
contained in Clause 23. It states that as soon as the money is received on behalf of the
clients, a receipt should be issued from the trust receipt book. The amount is to be paid in
the trust account. However, the receipts from this book should have the date issued, receipt
number, licensee, and also the name of the ledger.
b) Banking of trust money.
It's regulated in PSBA regulations 2014 within clause 18, where all the trust money should
always be banked before the end the next day as soon it's received. However, in the
scenario, it is not possible it should be banked the next day.
CPPREP4005 - Prepare to work with real estate trust accounts (Release 1)

Question 19
What is the name of a software package that can be utilized for trust accounting, and what is
its function/purpose?
Amberlo software package is the best solution for the firm since its cloud-based software
which ensure there is maximum security. It is suitable for both small and large firm and
can create a good framework for the client's agreement and other details which relates to
the clients in the market.
Question 20
In 50-100 words, explain the reason behind conducting internal and external trust account
audits.
The main reason behind it is to ensure there is an effective control process that will help to
minimize and also eliminate fraud and errors. It is one of the control mechanism, which is
part of the risk management policy. It is also ensuring reliable reporting systems that
ensure there are effectiveness and even accountability. Some clearly defined principles
should be adhered to to ensure there is an effective internal and external audit.
Question 21
What are at least (2) methods in which trust money can be provided/deposited into the trust
account?
There is a couple of method which could be adopted, which include the cheque settlement.
CPPREP4005 - Prepare to work with real estate trust accounts (Release 1)

You can credit the money to the account. In addition to that, you can also use the invoicing
method, and you can deposit the amount. However, the most important thing is to ensure
that that you have addressed the money to the right account with all the necessary details
have been added.
Question 22
What are the (2) ways that trust monies can be disbursed out of the trust account?
Re-Leased is the process that could be used to disburse money from the trust account and
then complete the payment of funds. However, you should ensure the procedure have
adhered. Another way is to disburse is through beneficiary of the money from the licensee
account with adherence to the set legislation.
Question 23
a) Explain in 50-100 words what is a Cashbook Receipts Journal.
The cashbook receipts journal is one the record used in the trust account and has two sides
which is receipt and payment side. The receipt side helps to details all the receipt which
have been entered either manually or electronically and should have details such as date,
receipt number, and name. The payment side details the cheque, which is drawn either
electronically or manually.
b) In the table below, write (2) examples of standard transactions into the cashbook receipts
journal that you would expect to see in your day to day real estate activity.
Date
money
received
Date
Recei
pt
Issue
d
Name
of
person
(Payee
)
Code or
Client
Description of
the matter
Amou
nt
receiv
ed
Acco
unt
Recei
pt
Num
ber
Date
Banked
02/08/2013 02/08/2
013
Ted
Johnson
Ted
Johnson
Advertising
payment – 2
Second St,
Byron Bay
$ 350.00 1206 02/0/2013
05/04/20
20
05/04/2
020
Martin
James
Martin
James
Rent payment –
Hyrax, Joules
rentals
$400 1350 05/04/20
06/04/20 06/04/2
020
Jane Boston Jane
Boston
Miscellaneousp
ayement
$ 200 1352 06/04/2020
CPPREP4005 - Prepare to work with real estate trust accounts (Release 1)

Question 24
a) Explain in 50-100 words what is a Cashbook Payments Journal.
The cashbook receipts journal is one the record used in the trust account and has two sides
which is receipt and payment side. The receipt side helps to details all the receipt which
have been entered either manually or electronically and should have details such as date,
receipt number, and name. The payment side details the cheque, which is drawn either
electronically or manually.
b) In the table below, write (2) examples of standard transactions into the cashbook
payments journal that you would expect to see in your day to day real estate activity.
Date
Payment
Made
Amou
nt Chequ
e
numbe
r
or
EFT
numbe
r
Payment
made to Identifier or
name of
payer
Description of
matter Ledger
identifier
debitedpaid
28/04/2013
$1900.00 1434 Air cold
Airconditio
ning
John Jones Airconditioning
Repair at 47
Robert St, Byron
Bay
JJ47
02/02/2020 $1500 1526 Water Bill
payment
Kim's kidney Footage of January
water bill
BB12
06/05/2020 $950 1530 Miscellaneo
us expense
Footer Clearance of
miscellaneous
expense
BB34
Question 25
a) Explain in 25-50 words what are trust account ledgers.
Trust account ledger contains all the information which is in the cashbook. The ledger has
CPPREP4005 - Prepare to work with real estate trust accounts (Release 1)

a unique number, which is also similar to the cashbook for every transaction. It includes
bank ledger, which summarizes all the money held for the clients. Also, there is a client
ledger that shows all the personal transactions for the clients. Rental bond suspense ledger
is also included.
b) What are the standard trust account transactions you would expect to see in a ledger in
your day to day real estate activity?
Each transaction should have key details, which include the date of the transactions, the
amount involved in the transaction, and the name of the payee. In addition to that, the
receipt number, which is on the ledger, should be the same on the cashbook.
Question 26
In 25-100 words explain what a trust account is;
a) Trial balance
At each end month, there should be extraction of the trial balance of the payment and
receipts. The trial balance is the original record, which is used by the business to show the
records. In the trust account, the payment should be deducted from the total receipts, and
the difference is carried to the following month. The total balance should balance, and if it
does not adjust.
b) bank reconciliation
The bank reconciliation is prepared to reconcile all the agency cashbook and the bank
account of the client. There is some figure which can appear in the cashbook and is missing
in the bank account and should be rectified to ensure the figure reconciles.
Question 27
Provide (1) example for each of the following, which is generated using standard trust
account transactions in day to day real estate operations and outline the types of information
these contain.
a) Report
An example of the report which gets generated from the transactions in the trust account is
the audit report, which is prepared to ensure there is a reduced level of the discrepancies. A
licensee who has received or, in other ways, held the trust fund.
CPPREP4005 - Prepare to work with real estate trust accounts (Release 1)

b) Statement
Bank statements are one of the documents which are prepared after making all the relevant
transactions after completing bank reconciliation. All the transactions which are on the
bank statement should be compared with the cashbook to ensure the figures are similar.
Question 28
What are the source documents?
Tenancy Agreements
Purchase invoices
Trust Receipts
payslips
Question 29
What is a transfer journal and give 1 example of its use?
Transfer journal is essential for the trust account, and there are some details which should
be included in the transfer journal, which include the date of the transfer, amount, and
names of the ledger. For instance, one of the transaction consists of the transfer of the
investment and the bank account.
CPPREP4005 - Prepare to work with real estate trust accounts (Release 1)