Schedule of Professional Services - Estate Agents: Report on Clients' money compliance


PROVISION OF A REPORT ON CLIENTS’ MONEY ACCOUNTING COMPLIANCE (ESTATE AGENTS)

The purpose of this schedule to our engagement letter is to set out the basis on which we are to report on your compliance with the clients’ money accounting requirements of the Estate Agents (Accounts) Regulations (EAAR) and your membership of the following where applicable: RICS, Propertymark, NALS, ARMA.

1. ESTATE AGENTS ACT 1979

1.1 Where you hold ‘statutory’ clients’ money as defined by the Estate Agents Act 1979, you are responsible for separating it from other clients’ money and dealing with it in accordance with the Estate Agents (Accounts) Regulations 1981.

1.2 Regulation 8 requires us to provide you with a report stating whether or not you have complied with the Estate Agents Act 1979 and the supporting regulations. To enable us to provide this report we are required to:

• ascertain particulars of all bank accounts you keep, maintain or operate; and

• examine your accounts and records and obtain such information and explanations we consider necessary to verify whether you comply with the requirements of the Act and the Regulations.

The following paragraphs are only relevant depending upon membership of the stated institution or body.


2. 2 THE PROPERTYMARK CONDUCT AND MEMBERSHIP RULES

2.1 2.1 As a member of Propertymark you are obliged to comply with Propertymark’s Conduct and Membership Rules. Rule 1, Propertymark’s Accounting Rule, relates to clients’ money.

2.2 2.2 Propertymark’s Accounting Rule requires us to prepare, and you to deliver to Propertymark each year, a report in the format prescribed by Propertymark regulation, in respect of any clients’ money that you hold direct as Principal Agent, or that you hold as a named Client Accounting Service Provider (CASP) on behalf of another member firm of Propertymark. We are required to annotate the checklist of enquiries set out in the report and to complete the declarations also set out therein, together with the results of two comparisons of the liabilities to clients shown by your clients’ ledger accounts with the cash held in clients’ money bank accounts, after adjustment for outstanding cheques and lodgements. To enable us to provide this report we will need to:

• ascertain particulars of all bank accounts you maintain; and

• examine your accounting records and the internal control systems of both your clients’ money and office records and obtain any information and explanations as we consider necessary for the purposes of the report; and

• carry out such tests of your clients’ ledger transactions as are required to enable us to complete the checklist of enquiries set out in the report; and

• examine your reconciliations of the liabilities to clients shown in your clients’ ledger to the balances held in your clients’ bank accounts on at least two occasions in the accounting year and the office records; and

• obtain any other information and explanations we consider necessary.

2.3 If you act as a named CASP for one or more member firms of Propertymark you must disclose this fact to us.

2.4 Should you engage the services of a named CASP in respect of your clients’ money, it is the responsibility of that CASP to deliver a report on its procedures, direct to Propertymark.

You must, however, continue to submit a report to Propertymark in the format prescribed by Propertymark regulation on any other client money that you hold direct. In particular you must prepare a report on any statutory clients’ money held, which cannot be entrusted to a CASP.

2.5 You must declare to us at the time of our visit any properties belonging to any principal, partner or director of the firm which are managed by, or on which rent is collected by, you.

 

2.6 Our report is solely for use by the firm and by Propertymark and will be submitted in accordance with Propertymark’s Accounting Rule.


2. NATIONAL APPROVED LETTING SCHEME (NALS) ACCOUNTING STANDARDS

2.1 As a member of the NALS you are obliged to comply with the NALS Accounting Standards relating to the keeping of accounting records and dealing with clients’ money. You are also required to be familiar with the provisions of the Royal Institution of Chartered Surveyors (RICS) Rent Only Residential Management Code.

2.2 As part of your membership of NALS you are required to submit a report from us confirming that you have kept adequate records throughout the period of all transactions relating to clients’ money received and handled by the firm and of your compliance with NALS Accounting Standards. To enable us to provide this report we will need to:

• ascertain particulars of all bank accounts you maintain;

• examine your records and obtain any information and explanations as we consider necessary for the purposes of the report.

• obtain any information and explanations we require.

2.3 Although we are not required to report on your compliance with the recommendations of the RICS Rent Only Residential Management Code, or on your bank reconciliations or the office records you have requested that we examine your clients’ money records and procedures and report to you where we consider that compliance could be improved.


2. THE PROPERTYMARK CONDUCT AND MEMBERSHIP RULES, AND REGULATION BY ROYAL INSTITUTION OF CHARTERED SURVEYORS (RICS) OR REGULATION BY THE LAW SOCIETY (THE SOLICITORS REGULATION AUTHORITY)

2.1 As a member of Propertymark who is also regulated by RICS or the Law Society (the Solicitors Regulation Authority), you are obliged to comply with the RICS guidelines or Solicitors Regulation Authority Accounts Rules relating to the keeping of accounting records and dealing with clients’ money.

2.2 We are not required to prepare, and you are not required to submit, an additional report to Propertymark on your compliance with Propertymark’s Accounting Rule whilst you continue to be regulated by RICS or the Law Society (the Solicitors Regulation Authority).

2.3 Although we are not required to report on your compliance with Propertymark’s Accounting Rule, or on your bank reconciliations or the office records, you have requested that we examine your clients’ money records and procedures and report [separately] to you where we consider that compliance could be improved.


2. NATIONAL ASSOCIATION OF LETTING AGENTS (NALS) ACCOUNTING STANDARDS, AND REGULATED BY PROPERTYMARK OR REGULATED BY RICS OR REGULATED BY THE LAW SOCIETY (THE SOLICITORS REGULATION AUTHORITY)

2.1 As a member of the NALS who is also regulated by RICS or Propertymark or the Law Society (the Solicitors Regulation Authority) you are obliged to comply with RICS guidelines or Propertymark’s Accounting Rule or Solicitors Regulation Authority Accounts Rules relating to the keeping of accounting records and dealing with clients’ money.

2.2 We are not required to prepare, and you are not required to submit, an additional report to NALS on your compliance with their accounting standards whilst you continue to be regulated by RICS or Propertymark or the Law Society (the Solicitors Regulation Authority).

2.3 Although we are not required to report on your compliance with the recommendations of the [RICS Helpsheet Clients’ Money: General Advice for Firms][Propertymark’s Accounting Rule] or on your bank reconciliations or the office records you have requested that we examine your clients’ money records and procedures and report [separately] to you where we consider that compliance could be improved.

 


2. ASSOCIATION OF RESIDENTIAL MANAGING AGENTS (ARMA) BYELAWS AND STANDARDS

2.1 As a member of the Association of Residential Managing Agents (ARMA) you are obliged to comply with the ARMA Byelaws and Consumer Charter and Standards. The ARMA Byelaws also require you to comply with the guidance contained in the RICS Service Charge Residential Management Code.

2.2 We are required to provide a report for you to submit to ARMA under the Byelaws and Consumer Charter and Standards on your handling of clients’ money, in the prescribed form. To enable us to provide this report we will need to:

• ascertain particulars of all bank accounts you keep maintain or operate; and

• examine your systems, books, accounts and documents produced relating to all money received and handled on a client’s behalf, and obtain any information and explanations as we consider necessary for the purpose of confirming each of the following points:

• separate ledger accounts are maintained for each client and adequate systems are in operation to identify and control client money at all times;

• service charge funds are held in accordance with s42 of the Landlord and Tenant Act 1987 and bank accounts in which such funds are held are clearly identified as client accounts and therefore do not form part of the assets of the member;

• client bank accounts are reconciled to the banks for the end of every month, within four weeks of that months and a record of this is kept;

• that we have checked the balances of such reconciled client bank accounts which in turn reconciled to the client cash held in clearly designated client bank accounts at banks, building societies or authorised deposit holders; and

• at the time of checking these balances no client account was found to be in deficit.

2.3 We may further need to provide written confirmation, where such is the case, that:

• you carry no client money; or

• that you only handle client money jointly with your client, and all monies are banked on the client’s own bank account. In this case we shall confirm this, and disclose the maximum value of a cheque that you may sign as sole signatory.

2.4 Our report is solely for use by you and by ARMA and must be submitted in accordance with the ARMA Byelaws and Standards.


2. ASSOCIATION OF RESIDENTIAL MANAGING AGENTS (ARMA) BYELAWS AND STANDARDS AND ROYAL INSTITUTION OF CHARTERED SURVEYORS (RICS) RULES

2.1 As a member of ARMA who is also regulated by RICS, you are obliged to comply with the guidelines of the latter organisation relating to the keeping of accounting records and dealing with clients’ money.

2.2 We are not required to prepare, and you are not required to submit, an additional report to the ARMA on your compliance with the ARMA Byelaws and Standards whilst you continue to be regulated by RICS.

2.3 Although we are not required to report on your compliance with the recommendations of the RICS Service Charge Residential Management Code or on your bank reconciliations or the office records you have requested (where relevant) that we examine your clients’ money records and procedures and report to you where we consider that compliance could be improved.

Updated January 2018

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