Worried about Trust Fraud? You should be.


Worried about Trust fraud? You should be.

The whiff of a trust account fraud is enough to send the toughest Principal weak at the knees.

We encounter many occasions where a fraud goes undetected for far too long because of inadequate internal controls over the activities of “trusted” employees. Just a few simple controls can significantly reduce the risks that this will happen to you.

If you are a busy Principal (aren’t we all?!), we recommend the following strategies to minimise your risk of trust fraud:

  1. Do a rental bond reconciliation each quarter. This task should be completed by someone who isn’t responsible for bond lodgements or bond claims. We see far too many examples of bonds being misappropriated because it’s such an easy target for fraudsters. Match tenant details to the Bond Board Report and investigate differences.

  2. Don’t just sign the bank reconciliation each month. Check and confirm the following first:

    • Check that the balance on the bank statement matches the balance on the bank reconciliation.

    • If there are outstanding deposits on the bank reconciliation, check that they have been banked the next day and appear on the bank statement.

    • If there are adjustments on the bank reconciliation, find out what they are and what is being done about them.

  3. Don’t just leave adjustments on your reconciliation from month to month.  The money belongs to someone!

  4. Ask your PM or trust accountant to explain what is being done about “unknown deposits” or Suspense Account transactions because these unidentified amounts need to be receipted. The funds belong to someone!

  5. If you must take cash from tenants, please make sure that the receipting and banking functions are done by different staff members.

  6. Keep an eye out for cheques that remain unpresented for several months. Cancel and reissue if necessary.

  7. Send your unclaimed money to the Office of State Revenue as soon as it is 2 years old at 30 June each year.

  8. Unclaimed moneys are easy pickings for the entry level fraudster.

Quite often, it’s the perception that you are being vigilant that will save you from trust fraud.  Better yet, follow the above steps and keep asking the questions until you are satisfied with the answers.  You’ll sleep much better.

For further information, please contact:

Stephen Fisher
Managing Director – Accounting

Greg Jemmeson
Managing Director – Legal