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Brokerage Standards Manual

Notice of Change: Information in this manual changed when new agency and disclosure rules came into effect on June 15, 2018. Learn more about the new rules.Notice of Change: Information in this manual changed when new agency and disclosure rules came into effect on June 15, 2018. Learn more about the new rules.

Year End Reports and Office Inspections

6. Council Review Of Accounts And Other Brokerage Records

Under section 7-6 of the Rules, RECBC regularly conducts inspections of brokerages throughout British Columbia. The purpose of these inspections is to ensure that brokerages have proper controls in place to protect trust monies. Additionally, the inspection tests for compliance with the other requirements of RESA, the Regulation, the Rules and Bylaws. The inspection includes, for example, a review of:

  • the brokerage’s books and records
  • written disclosures that are required to be made; and
  • service agreements entered into by the brokerage.

RECBC’s intention is to examine all new brokerages in the province within 12 months of the brokerage obtaining licensing under RESA. Random inspections are also undertaken. Further, some inspections are the result of a complaint, exceptions on an Accountant’s Report or deficiencies identified in a previous inspection.

In advance of an inspection, RECBC will, in most circumstances, notify the brokerage setting out the books and records that may be required to be reviewed by RECBC’s Audit Department.

When RECBC’s auditor arrives at the brokerage’s office, he/she will want to have a brief discussion with the managing broker of the brokerage with the focus on gaining some knowledge about the brokerage, the level of activity during the year, determining what additional documents will be required to perform the examination and having the managing broker introduce any key staff members to the auditor.

During the inspection, the auditor is normally looking to ensure that:

  • the brokerage maintains a proper place of business (section 2-5 of the Rules);
  • the brokerage has the brokerage licence displayed prominently in the reception area and the licences of all related licensees available for inspection (section 4-1 of the Rules);
  • a sign indicating the licensed name of the brokerage at the entrance to the office, and in the building directory, if applicable (section 4-2 of the Rules);
  • the brokerage has a managing broker in active charge of the business (section 6 of RESA);
  • the brokerage maintains proper books and records (part 8 of the Rules), including:
  • monthly trust reconciliations for each trust account;
  • monthly trust liability reconciliations listing every client the brokerage holds trust funds for and the amount of funds being held for each client;
  • trust bank statements, cancelled cheques and deposit books;
  • trust journal and ledger for each trust account;
  • a list of all trades in real estate,rental properties, and strata corporations managed by the brokerage;
  • trade record sheets and copies of contracts in all real estate sales files;
  • rental property management files containing copies of tenancy agreements, accounting statements sent to owners, invoices and service agreements;
  • strata management files containing accounting statements sent to strata corporations, invoices, monthly statements provided by financial institutions, service agreements;
  • general account bank statements, cancelled cheque reconciliations and journals;
  • trust accounts have been designated as such by including the words “trust account” on the trust cheques and bank statements;
  • trust accounts have no overdrafts or debit balances, and funds held in trust by the brokerage have been deposited;
  • disclosures that have been made in personal real estate acquisitions; and
  • trust or general accounts have no unusual items flowing through them.

All licensees should keep in mind that the items being reviewed are expected to be in a current state as they are considered to be crucial to the brokerage’s business.