Management Accounting Assignment: Trust Accounting Principles

This management accounting assignment comprehensively addresses various aspects of trust accounting. It begins by outlining the necessary documents for trust records and the organizational policies and procedures to ensure compliance. The assignment then delves into the use of professional third parties, the selection of accounting systems, and compliance requirements for trust accounts. It explores the identification, storage, and retrieval of source documents, and the processes for error reporting and correction, including relevant legal sections regarding deficiencies and irregularities. Furthermore, the assignment defines trusts, their historical context, and the roles and responsibilities of trustees. It details different types of trusts, fiduciary relationships, and the implications of inter vivos trusts, including the winding-up process. The document covers transaction processes, client fund protection, disbursement procedures, and the review of policies and procedures. Additionally, it discusses auditing and financial reporting systems, continuing professional development (CPD) requirements, and the core elements of a trust. The assignment concludes by examining post-receipt actions, computerized accounting systems, monthly requirements, ethical and statutory compliance, client fee explanations, and file note examples related to errors and audits. References are also included.

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Table of Contents
1. What documents are required with trust records?................................................................4
2. What policy and procedure are in place at your organization to ensure trust requirements
are met, and meet compliance requirements?..............................................................................4
3. It is acceptable that you can’t be a qualified accountant, lawyer, conveyance financial
planner, etc. So what professional third parties will you use and refer at your organization?
What is the process to action their recommendations and how is it disbursed/ communicated to
the employees?.............................................................................................................................5
4. What type of accounting systems does the organization use and why was it chosen? What
are the compliance requirements for trust accounts?...................................................................6
5. What are source documents and how are they identified, stored and retrieved?..................7
6. If there is an error at your organization, how it is reported and how it is corrected? Who
with you seek out if you needed help with a problem? Which are the two sections of the Act
that provide for trust account deficiency and irregularity, and explain what is required when
deficiency occurs?........................................................................................................................8
7. What is a trust, and why or when would I prefer to use one. How did they come about and
why?.............................................................................................................................................9
8. What are the powers and duties of a trustee? Are there any reasons why wouldn’t you
agree to become a trustee?.........................................................................................................10
9. List the types of trusts with the brief clarification of how they differ................................11
10. What is, and what are the features of a fiduciary relationship? Who is a fiduciary
obligation?..................................................................................................................................12
11. Trusts are inter vivos. What does this mean? Include express and discretionary trusts in
your answer................................................................................................................................13
12. Describe the winding up process of a trust.....................................................................13
13. A different process for manual versus electronic transaction..............................................14
14. How is your client fund protected? Describe current data protection legislation with the
issue of privacy?.........................................................................................................................15
15. How are fund disbursed and how is that disbursement authorised, checked for accuracy
and to prevent fraud? Refer to relevant legislation to answer?..................................................16
16. Who reviews and how is your policy and procedure system reviewed for compliance and
currency?....................................................................................................................................17

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17. What is the auditing and financial reporting system in an organisation? What legislation is
required to compile with it?.......................................................................................................18
18. What CPD requirement is available for staff and in what areas of expertise would you like
them to be available for you?.....................................................................................................19
19. Explain five major elements which make up a trust?..........................................................19
20. after receiving trust money, what must you do?..................................................................20
21. Explain the two requirement of computerized accounting systems set up?.......................21
22. What must you do after the each and every month regarding trust account?......................22
23. Act ethically and complying with all statutory requirement in the company, what does it
mean to you and your organisation?..........................................................................................22
24. What we need to explain to our client while charging fee from them?...............................23
25. Brief of question 11-20:.......................................................................................................23
26 complete a file note for the q6 above then another file note when the audit has to be
completed...................................................................................................................................24
References......................................................................................................................................27

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1. What documents are required with trust records?
It can be determined that there are various records which are to be kept with that of the trust
records so as to maintain the transparency as well as the effectiveness. In addition to the register
of numbers the societies or trust should also consider the types of records that need to be
maintained (Hadzhikotev, 2015). The documents size will be affected by the size and structure
and also by the activities that is performed by the particular society and trust (Reddy & Kamal,
2017). The financial records that are necessary in order to retain the society would include the
following:
 All bank account statements
 Receipt book properly numbered and its duplicate copy
 The bank deposit book
 All payment authorizations and invoices
 All the cheque books whether it is used or currently in processing
 The payment and receipt journal
 A petty cash payment book
With this there is also the need for the common seal on the incorporation by all the societies.
This seal is generally used in the documents which are legal and in which the society has entered
into so that the accountability in the financial reporting can be maintained (Reddy & Kamal,
2017).

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2. What policy and procedure are in place at your organization to ensure trust
requirements are met, and meet compliance requirements?
There are several procedures and policies which are established so as to ensure that the
compliance requirements are met and the success of the organization has been achieved
(Hadzhikotev, 2015). In order to meet the compliance requirements the following procedures are
been followed:
 The reporting requirements as well as the documents of the trust are reviewed on regular
basis so as to enable that they meet the legislative and the compliance requirements.
 The monitoring of records is done so as to ensure the security of the trust records as they
needs to be implemented and developed.
 The entries and the transactions of the trust accounts are checked regularly and also
monitored so as to ensure that they comply with the agency practice as well as the legislative
requirements (Kang, et. al., 2018)
 The periodic reconciliation is done by the licensing in charge with that of the legislative
and the compliance requirements.
 In order to deliver the accuracy in financial reporting the periodic financial reports are
prepared and then discussed it with the clients (Hadzhikotev, 2015).
 The authorization and the verification of the trust accounts is done so as to determine that
the legislative audit requirements are been met and in turn will enable to achieve the
transparency as well as the accountability in the financial reporting so that the success of the
organization can be maintained on the external environment (Hadzhikotev, 2015).

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3. It is acceptable that you can’t be a qualified accountant, lawyer, conveyance
financial planner, etc. So what professional third parties will you use and refer at your
organization? What is the process to action their recommendations and how is it disbursed/
communicated to the employees?
As it has been determined that the no one can be the qualified professional so in order to
maintain the effectiveness and efficiency within the organization it is necessary to take the use of
third parties so that the growth of the organization can be achieved. There is the third party who
is doing the business so that the employees can be hired directly and the students can get the
employment opportunities. The third parties who will be used in the organization are:
 Employment agencies: these agencies list the various situations for the number of clients
in organizations and obtain the imbursement in return for the candidate being hired.
 Contract Recruiter: these are the organizations which makes the agreement with an
company to act as the employer’s representative in the employ occupation as well as the
recruiting (Shanker, 2018).
The process which is used is to do the proper auditing of the third party so that the risk of
getting the loss can be reduced and the proper investigation also is done of the third party so as to
maintain the transparency as well as the effectiveness in their financial reporting. These
recommendations which are provided by the third party to the organization is communicated to
the employees through proper channel that is the online channel is been created and then the
relevant information to be communicated is shared at that platform so that anyone can easily
access the information and can also revert on the same platform this will enable to sustain the
sense of teamwork.

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4. What type of accounting systems does the organization use and why was it chosen?
What are the compliance requirements for trust accounts?
The organizations use various types of the accounting systems in the organization which are as
follows:
Single entry system: This is one of the indispensable bookkeeping structure and this system is
useful for the undersized organizations that have not many and trouble-free operations.
Double entry System: this is difficult but additional perfect system. In this each recognition must
be identical to the deduction (Alles, et. al.,2018).
Manual System: This means that there is not any involvement of the computer in the financial
reporting.
Computerized system: The use of the computer is done so as to accomplish the accounting
functions.
These systems are chosen by the organizations so that the accuracy in the financial reporting can
be done and with this the financial performance of the organization can easily be examined.
The compliance requirements for the trust accounts are as follows:
Requirements for recordkeeping for trust fund deposits
Requirements for trust fund disbursements
Requirements for all trust fund transactions
Reconciliation requirements for trust funds
Maintaing associated documents

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5. What are source documents and how are they identified, stored and retrieved?
The source documents are the original records which contains the details related to the
substantiate a transaction entered in the accounting system. This is also the document in which
the data collected for the clinical purpose is first recorded. This is latterly entered in the case
report form. For illustration: A corporation foundation article for the cassette of the products
buyer is the proof of purchase of the provider which is incorporated by the receiving tickets and
the purchase order. The identification of the source documents are done through the proper data
and the information of the communication such as the quantity of the matter and to whom the
contract has to be made. With this it also determines the principle of the deal and the
appointment of transaction. The common documents of the source documents include:
 Invoices
 Cancelled checks
 Memo of credit for the refund of customer
 Deposit slips
 Purchase order
 Computer generated receipts
 The time cards of employees
The recording of the source documents should be done in appropriate manner and also the
accurate accounting journal as soon as the transaction has been preceded. Once the recording is
done then all the documents should be filed in some of the system which is used by the
organization so that they can easily be retrieved anytime whenever needed. If it is necessary to
facilitate the storage of the accounting and legal documents then it is necessary to check with the

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relevant institution so that the documents can be accepted in the manner in which the planning
has been done to use.
6. If there is an error at your organization, how it is reported and how it is corrected?
Who with you seek out if you needed help with a problem? Which are the two sections of
the Act that provide for trust account deficiency and irregularity, and explain what is
required when deficiency occurs?
If there is an error in the reporting then it is examined that the mistake basically occurs in the
credit reports (Raskin, 2016). The credit bureaus are basically taken into the consideration so that
the mistake can be corrected when the mistake has been found but in some cases the mistakes
which are found can go unnoticed for the longer period of time. These mistakes may cause the
little amount of the damage to the credit score but the damage depends upon the mistake which
has been made by the organizations. The two sections which determine the trust account
deficiency and irregularities are as follows:
Deficiency: Section 226 of Legal Professional Act 2008
Irregularity: Section 227 (2)
When the deficiency occurs in the organization then it is necessary to all the financial records as
well as the transactions properly so that the area of the problem can be determined and
accordingly the actions for the future growth and success can be identified. With this it is also
necessary to identify all the credit transactions so that the information for the credit as well as the
debit transactions where the mistakes are made can be identified and then the improvement for
the mistaken transactions can be done and then the proper planning for removing or eradicating
the deficiencies can be made (Longenecker & Fink, 2015).

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7. What is a trust, and why or when would I prefer to use one. How did they come
about and why?
The trust can be defined as the worldwide assessment of relations dependability as observed by
the representative. Hierarchical trust is characterized as a legislative body feeling of conviction
that the organization will execute actions that are gainful, or if nothing else not. In the UK an
exposed or straightforward trust is one where the recipient has a prompt and supreme ideal to
both the capital and salary held in the trust. Exposed trusts are ordinarily used to exchange
resources for minors. By chance, the job of remuneration in driving trust has additionally been
addressed by crafted by Donald Ferrin and Kurt Dirks, who trust compensate structures impact
relational trust in the work environment and have demonstrated its effect on results like work
execution, hierarchical citizenship, authoritative responsibility, turnover expectation, fulfillment
and gathering execution. In addition to other things, they found that the "examinations, joined
with earlier research, recommend that directors can anticipate that reward will have solid,
unsurprising impacts on relational trust." Lastly, do recollect that trust is complementary. As
Harold Macmillan once said "A man who confides in no one is well-suited to be the sort of man
no one trusts." The surest method to gain the trust of workers is to demonstrate to them that you
trust them consequently. At the point when joined with a feeling of prosperity and the privilege
natural variables, they will result in commitment, vitality, a helped feeling of prosperity, and
reasonable elite for work results.
8. What are the powers and duties of a trustee? Are there any reasons why wouldn’t
you agree to become a trustee?
Powers of Trustee:

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The Trust Deed generally decides the forces of a Trustee. The Deed regularly concedes Trustees
with wide powers to permit the best possible organization of the trust. While these forces
fluctuate, the most well-known forces incorporate purchasing and offering trust property,
deciding appropriations to recipients, the contracting of experts, tradesmen and temporary
workers and in addition the opening and working bank or building society accounts.
Duties of Trustee:
 Lodge the trust deed with master of the High Court: As per Section 4 of the Act, Trustees
(before he or she accept control of the trust property) to stop the underlying trust deed with the
Master; pay the Master's expenses; be acquainted with the trust directions including the nature
and degree of their forces and obligations and to hold up alterations to the deed with the Master.
 Acting only when authorized to do so: As indicated by Section 6 of the Act, any
individual who is designated as a Trustee as far as a trust instrument, Section 7 of the Act or a
court arrange which came into power after the beginning of the Act, will act in that limit just
whenever approved thereto by the Master.
Reasons for not becoming trustee:
Loss of ownership of assets: On the off chance that you exchange your own resources for a
trust, at that point the trustees of that trust will control the benefits. Despite the fact that you can
hold some control by holding the ability to choose as well as evacuate trustees, or even by being
a trustee yourself, recall that advantages you exchange to the trust are not any more your own.
On the off chance that you keep on regarding the advantages as your own, any trust could be
available to challenge as a sham.

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9. List the types of trusts with the brief clarification of how they differ.
Revocable trusts: Revocable trusts are complete amid the life span of the belief maker and can
be accustomed, distorted, tainted or repudiated totally. Frequently called a living wage trust,
these are confides in which the trust maker connections the label of a goods to a conviction, fills
in as the underlying trustee, and can drive out the material goods from the expectation amid his
or her duration (Venkata, et. al., 2017).
Irrevocable trusts: Irrevocable trust is solitary which can't be adjusted, misrepresented, altered
or denied after its conception. Formerly a assets is exchanged to an unavoidable conviction,
nobody, counting the trust maker, can remove the belongings from the trust. It is conceivable to
buy survivorship extra security, the advantages of which can be detained by an obligatory trust.
With this there is assets defense trust, generous trust, productive trust, individual needs trust, tax
by pass trust and totten trusts. Not having the capacity to deny the trust is a piece of an exchange
off that accompanies a few different advantages. The most straightforward distinction between
the two is that advantages stay in the grantor's domain in a revocable trust however move out of
the home in an unalterable trust.
10. What is, and what are the features of a fiduciary relationship? Who is a fiduciary
obligation?
There are distinctive features which are being possessed by the fiduciary relationship such as:
Firstly, for a man to be a trustee, he more likely than not attempted to propel the interests of
another. Where such a position hosts been expected by one get-together to any lawful
relationship then that gathering's position is conceivably a guardian one. The situation of an
operator to the relationship exists to help the vital. Hence, a specialist is a guardian (Rifkin,
2014).