A newsletter from the Real Estate and Business Agents Superv i s o ry Board
Issue No 27 Website: www .reba.wa.gov.au Spring 2001
Auditors’ independence is vital
The Board has been reviewing the question of independence with regard to auditors
of real estate and business agents, appointed pursuant to section 73(2) of the Real
Estate and Business Agents’ Act to report on agents’ trust accounts.
Section 72(3) states: made pursuant to section 72(3) and the This directive from the Board extends
“An auditor shall disclose to the Board question of the auditors’independence to preclude partners of auditors or any
any close relationship by blood or was raised yet again. other personnel of the auditing firm
marriage he has with an agent whose from having business relations with the
The Board is mindful auditors are
trust accounts he has been appointed audited agency.
required to be seen to be independent
to audit or any business dealings he has
of the audited entity. To maintain an BUSINESS DEALINGS WITH
with or through such agent at any time
acceptable independent status, the THE AGENT INCLUDES, BUT IS
during his appointment as auditor, and
Board has issued the following NOT LIMITED TO, ANY
the Board may, if it thinks fit,disqualify
directive: AUDITORS ARE NO TA X AT I O N / AC C O U N TA N C Y
that auditor from acting in that
LONGER PERMITTED TO HAVE WORK DONE ON BEHALF OF
ANY OTHER BUSINESS THE AGENCY.
In the course of last year’s review, the DEALINGS WITH THEIR AGENT
Agents who need to change their
Board noted there were 36 disclosures CLIENTS.
auditor to comply with the Board
directive, should apply in writing at
Full disclosure of commission least one month before engaging a new
The Board has noticed some agents are claiming auditor and include:
commission on sale authorities by referring to a
◆ reasons for the change;
Schedule of Fees in the selling agent’s authority.
◆ agreement from the current
Section 60(2)(a) (iia) of the Act requires an agent to fully disclose the method
auditor, relinquishing statutory
of calculating sales commission in the agent’s selling authority.
Article 14(c) of the Code of Conduct also precludes an agent from ◆ an acceptance of responsibility
demanding or receiving a commission from its principal (Vendor) if the from the nominated replacement
vendor has not signed or initialed the relevant clause in the authority. auditor.
Applications should be addressed to:
To ensure compliance with the Act and Code of Conduct, the original copy
of the vendor’s selling authority must have attached to it a copy of the The Registrar
"Schedule of Fees". The schedule must be signed/initialed by the vendor. Real Estate and Business
The vendor should also be provided with a copy of the selling authority and Agents Supervisory Boar d
schedule of fees at the time of signing. 6th Floor 219 St Geor ge’s Tce
Perth WA 6000
How to correctly claim Agents need to
advertising expenses There is evidence some
There has been an increased incidence of vendors real estate agents are
complaining to the Board regarding agents neglecting failing to check the
to follow the correct procedures for claiming registration of their sales
reimbursement of advertising expenses relating to the representatives.
sale of a property. The problem was recently
highlighted by a case where a sales
Article 15 of the Code of Conduct sets that the expense had been actually
incurred.This requires an itemised representative enquiring about his
down the procedure to enable agents
list of expenses,dates and types of certificate of registration,found it had
to seek reimbursement of certain
advertising, amounts of each expired in 1999. The representative
advertisement etc to establish the had been employed by two different
Article 15(1) states: expenses have been properly agencies since his registration had
incurred. General marketing lapsed.
"If an agent is entitled to seek expenses incurred by the agent, for
reimbursement from his or her instance window display, realnet or Agents must be aware of the
principal of any expense which the webpage,are not claimable unless requirements of Section 54(i) of the
agent has incurred, the agents shall the expenditure is individually Real Estate & Business Agents Act ,
promptly supply to the principal all itemised and costed specific to the which states:
relevant information and material vendor’s property;and
"An agent shall not employ as a sales
which the principal may reasonably ◆ is required to justify and provide
representative,or permit to carry out
require in order to be satisfied as to proof of the expenses claimed
from the vendor without being in the business of the agent any of the
the amount of the expense and that
requested to do so by the vendor functions of a sales representative,
the expense was properly incurred by
ie. before payment is made or any other person, not being a
monies are deducted from the licensee who is the holder of a
(2) "An agent shall not seek or retain trsut account,if prepaid.
current triennial certificate, unless
reimbursement of an expense which The following policy should be
that person is a registered sales
the agent has incurred in respect of adopted by agents in securing or
advertising, sign boards, printed receiving advertising expenses:
material and promotions unless - "Penalty $3,000"
◆ where the expenditure has been
(a) the principal has agreed in writing It is recommended agents sight the
incurred and paid for by the agent
to pay the expense; current certificate of registration of
and the vendor has agreed to
reimburse the agent for expenses all sales representatives and property
(b) the agreement specifies a managers and monitor their
incurred, then payment may be
maximum amount which the agent continued registration.
received by the agent into the
may seek or retain by way of general account;and
reimbursement;and Sales representatives and property
◆ where the vendor has agreed to managers are reminded they are also
(c) the maximum amount has been contribute an amount for required to advise the Board in
initialled on the agreement by the advertising expenses and that
writing within 14 days of ceasing or
principal." amount has been pre-paid to the
commencing in the employment of
agent prior to incurring the
In order to comply with Article 15(1) any agent.
expenses, then the amount
an agent: received must be paid into the Further changes of address must also
agent’s Trust Account and
be advised to ensure receipt of any
◆ must give the vendor adequate reimbursement must be made to
renewal notice of your certificate of
information to satisfy the vendor the vendor of any amount not
as to the amount of expense and incurred.
Proactive program a big success
The Board has decided to extend its not simply an easy w ay to in vestigate R/E Agencies in WA.
Proactive Compliance Program based I thought it was a g reat idea and found it very assuring
on its overwhelming success during an that we were on the right track."
initial 12-month trial. "As your records will demonstrate, our of fice was doing
The aim of the program has been to provide education and quite well. We appreciate the chance to ha ve a check-
advisory services to give real estate agents a greater point."
understanding of their duties and obligations,as well as the "I think there is some 'fear' amongst agents and man y
role and functions of the Board. myths! Why don't you let agents
The proactive team has carried out write testimonial r egar ding the
more than 200 compliance visits. proactive visits and circulate with
"This was the first time in the Newsletter?"
Those agents have since been
17 years that our office has
surveyed to determine the program’s been visited. Would suggest The responses to the non-
effectiveness, quality and relevance biannual visits would be compulsory sur vey demonstrate the
to the industry. The following is a appropriate." p ro gram has been a resounding
representative sample of the success and very well received by
comments received: agents.
"This was the first time in 17 years that our of fice has been As a result of the positive feedback,the Board has resolved
visited. Would suggest biannual visits would be to provide extra resources to ensure the continuation of the
"For so long the Board has been seen as the enemy - the The Board believes the ongoing success of the proactive
person with the Big Stick. This new initiative will be compliance program is dependent on it continuing to meet
greeted with some suspicion but people will soon realise the needs of the real estate industry and welcomes any
that you are really trying to help and that the prog ram is feedback.
Maintaining your trust account
The Board has received month. accounts at the end of each month.
reports that a number of They must also be kept in a manner
real estate agents are not Buf fer Accounts
that allows them to be properly and
treating their variable
conveniently audited annually by the Agents are also reminded that
outgoings accounts as
agent’s statutory appointed auditor. additional funds should not be placed
in the trust account.
The Board is of the view that variable REBA Bond Trust Accounts
This practice is seen by the Board as
outgoing bank accounts must be
Agents are reminded that if they an attempt to avoid detection of errors
treated as trust accounts and
maintain a REBA Bond trust account, that would otherwise be identified
accounted for in accordance with the
they are required to ensure such through over-drawing of the account.
provisions of the Real Estate and
accounts are maintained according to
Business Agents Act.
Agents should not confuse buffer
the trust accounting provisions of
The proper accounting for variable accounts with commission holding
outgoing accounts includes,but is not accounts which should be cleared to
limited to, ensuring the accounts are Many agents are not correctly the agents general account down to
correctly balanced at the end of each balancing their REBA Bond trust ‘NIL’ balance at least once per month.
New privacy laws could affect you!
The new Federal privacy laws coming ◆ businesses,including not-for-profit organisations,such as
charitable organisations, sport clubs and unions, with a
into force in December could affect Real
turnover of more than $3 million;
Estate and Business Agents throughout
Western Australia. ◆ organisations that carry on a business that collects or
discloses personal information for a benefit, service or
The Privac y Amendments (Private Sector) Act 2000 (the advantage (even if their turnover is less than $3 million);
Act) regulates the way private sector organisations collect, and
use, keep secure and disclose personal information.
◆ small businesses with a turnover of less than $3 million
Personal information is information or an opinion that can that choose to ‘opt in’.
identify a person. The Act contains a set of National Privacy Principles (NPPs)
about how organisations should
The Act also has special protection handle personal information.
for personal information that is The Act contains a set of Organisations may have and enforce
sensitive information - information or National Privacy Principles their own codes approved by the
an opinion about matters such as an (NPPs) about how Privacy Commissioner.
individual’s racial or ethnic origin, organisations should handle
political or religious opinions personal information. The new provisions apply from 21
or associations, or their criminal December 2001. Small businesses,
record. except health services, covered by
the new provisions must comply from December 2002.Only
The Act means consumers now have a right to know about some of the NPPs will apply to the information organisations
information an organisation holds about them and a right to already hold when the new provisions start to apply.
correct that information if it is wrong. Consumers can also
make a complaint if they think their information is not being For further information about the Act,visit the Office of the
handled properly. Federal Privacy Commissioner’s website at
www.privacy.gov.au;or contact the:
Those within the scope of the Act can be individuals,
corporate bodies,partnerships or trusts.These include: Privacy Hotline 1300 363 992.
Be “up front” about account shortfalls
The Registrar of the Real Licensees must also inform the Board, Inspections have revealed some
Estate and Business within five days, of the name and licensees think they can conceal trust
Agents Supervisory Board number of the trust account, account deficits and trade their way out
has some advice for name and address of the financial of any problem.The Board’s experience
licensees who are aware institution where the account is is that licensees who try to trade their
there may be deficiency maintained,the amount overdrawn and way out of a problem end up with a
in their trust accounts. the reason. bigger deficit.
If you suspect you have a deficiency,
C o n t a c t d e t a i l s
tell the Board IMMEDIATELY.
6th Floor Forrest Centre
Licensees should be aware that under 219 St George’s Tce,
REBA News is a quarterly Perth WA 6000
current laws, financial institutions are newsletter produced by Locked Bag 14,
obliged to advise the Board of agents the Real Estate and Cloisters Square 6850
who have ove rd rawn their trust Business Agents Telephone (08) 9282 0843
account. Facsimile (08) 9282 0869