National Business Institute: Trust Account Homework BSBCNV506

This assignment addresses the establishment, management, and administration of a trust account within a conveyancing practice, specifically focusing on the BSBCNV506 unit. It details the process of reporting and correcting errors, including the roles of legal practitioners, the Law Society, and auditors. The solution outlines the steps involved in identifying and reporting errors, the use of an Irregularity Report Form, and the importance of notifying relevant authorities. It also examines the implications of trust account deficiencies and irregularities, referencing Sections 154 and 147 of the relevant legislation. Furthermore, the assignment includes two file notes documenting events and activities, one detailing the initial error identification and reporting process and the other summarizing the audit completion and subsequent actions. The file notes highlight communications, recommendations, and the implementation of corrective measures to ensure compliance and prevent future errors. The assignment emphasizes the importance of maintaining accurate records and adhering to legal requirements in trust account management.

Running head: QUESTION FIVE AND SIX 1
Question Six and Twenty-Six
Name
Institution

QUESTION FIVE AND SIX 2
Question Five and Six
Question 6: If there is an error at your organization, how is it reported, and how is it
corrected? Who would you seek out if you needed help with a problem? What are the two
sections of the Act that provide for a trust account deficiency and irregularity, and explain
what is required when a deficiency occurs.
The first step in reporting the errors is the legal practitioner, upon identifying potential
errors, gives the information to the Director, providing all the relevant supporting documentation
to support the claim of errors identified after conducting an audit. After that, a written notice of
the error or irregularity is presented to the Law Society after completion of the auditing process
as provided for in the Legal Practitioners Act. The Law Society has provided an Irregularity
Report Form where such errors, confirmed irregularities and suspected irregularities upon being
identified are reported by a practitioner. Also included in the form are any details of the failure to
comply with the Conveyancers Act 2006 and regulations to the Act. The auditor notifies the
authority and the estate agent immediately after being aware of or having enough proof to
suspect any deficiency and irregularity. When making a notification, the auditor provides details
of the date on which the defect was reported, the amount in question and the reasons why the
deficiency or irregularity occurred.
Recommendations are then reported back by the auditor in his report to the estate agent
or the legal practitioner in charge of the trust account. The agent is afterwards obliged to adopt
the recommendations. In case of any objections to the proposals, they are reported back to the
authority for considerations. If the relevant body rejects the objections, the practitioner has to

QUESTION FIVE AND SIX 3
adopt it without any delay upon receiving written notice. The deficiencies and irregularities often
occur in trust accounts and trust ledger accounts.
Section 154 talks about trust account deficiency and irregularity. It provides guidelines
on what amounts to such irregularities and the procedure of correcting them as stated in the law.
Section 147 also talks about the basic requirements for the maintenance of trust records. It relates
section requires the practitioner to be maintaining records that represent the correct position with
regards to money received on behalf of the person he represents. It has also provided for the
maintenance of trust ledger accounts in accordance with rule 47.
Question 26: Complete a file note for Q 6 above then another file note when the audit has
been completed
A file note is a tool used to document events and activities carried out between clients
and agents. It documents a chronology of events and processes that lead to a particular intended
outcome. It also shows decisions and interactions on things said, propositions and suggestions. A
file note therefore, acts as a critical conflict resolution tool that serves as a reference point in case
the proposed recommendations that were initially recorded in the file note are not adhered to or
implemented appropriately.
Error Reporting and Correcting File Note
CONFIDENTIAL
[date]
To file

QUESTION FIVE AND SIX 4
Upon identification of the errors, a meeting was held with the management represented
by the Director. During the meeting, findings were presented that reported anomalies. These
errors were brought to the attention of the Director by the practitioner. After a meeting that lasted
for close to eight hours with other stakeholders and scrutiny of the report. It was unanimously
agreed that indeed, some errors and irregularities needed to be rectified. The practitioner, who is
also a law expert was tasked with that responsibility of preparing all the relevant documentation
to facilitate the process. With full support from the Director, the legal expert notified the Law
Society through a written notice immediately as required by the law, clearly stating the findings
and areas of concern where the errors are. The Law society then provided the Irregularity Report
form by sending it through mail to be filled by the expert. He clearly stated the amount of
money, those who were involved, and what had caused the errors reported. All this information
was captured on the form and verified as being right by all the parties involved. After confirming
that all the required information in the form had been filled, he mailed it back to the Law Society
that confirmed receipt of the same through the mail. He also retained a printed copy of the same
as required by the law in the computerized accounting system rule 38(2).
The following day the Law Society responded by sending their recommendations based
on the information that was sent to them. They acknowledged that indeed, there were errors
made at the organization and provided a report on what they recommended as a course of action
to correct the errors and ensure conformance to the relevant required standards. The
recommendations were upheld and implemented after being confirmed to be satisfactory by the
management, as they were found to have provided a solution to the errors by making the
necessary corrections.
After Completing the Auditing

QUESTION FIVE AND SIX 5
CONFIDENTIAL
[date]
To file
The auditor presented the audit report after analyzing the information available
about the trust account to the representing agent, who in turn gave it to the Director under whom
he works. An acknowledgement of the receipt of the audit report was sent to the Law Society,
which acts as the overall governing body tasked with the responsibility of overseeing the
implementation of trust account policy requirements. A meeting was then held to come up with
guidelines on how to ensure such errors do not occur again. It was done by coming up with the
regulation of strict and careful analysis of each information before being recorded, and ensuring
it is accurately recorded. Strict adherence to legal requirements was also agreed upon. The legal
practitioner promised to ensure that all the agreements would be followed and that errors would
not occur in future since all the measures had been put in place to guard against such mistakes re-
occurring. The audit report was then implemented.