WHEREAS by Rule 34(3) under the Real Estate Act, S.A. 1995, c. R-4.5, the Real Estate Council of Alberta (the “Council”) has the power, duty and responsibility to prescribe, adopt and approve the form for and information contained in the Engagement Letter Between Accountant and Client pursuant to which the Accountant’s Report shall be prepared.
THEREFORE BE IT RESOLVED THAT:
The Council hereby prescribes, adopts and approves the form attached hereto as Schedule “A” and the information contained therein as the form and information required for the Engagement Letter Between Accountant and Client pursuant to which the Accountant’s Report shall be prepared.
DATED at Calgary, Alberta on this 9 th day of July 1996.
SCHEDULE “A”
REAL ESTATE ACT
ENGAGEMENT LETTER BETWEEN ACCOUNTANT AND CLIENT
Agent
_____________________________________________________________________
Address
_____________________________________________________________________
City
_____________________________ Province _____________ Postal Code _________
Phone
_________________ Fax ________________ e-mail address ____________________
Attention
_____________________________________________________________________
(agent or designated representative)
Dear Sirs:
This letter sets the terms of our engagement as accountants for the purpose of reporting under section 25 of the Real Estate Act.
The agent to be reported on is as follows:
Agent
______________________________________________________________________
Address
______________________________________________________________________
City
_________________________ Province _____________ Postal Code ______________
Phone
__________________ Fax ________________ e-mail address ____________________
Location of Branches
____________________________________________________________
This engagement, for the fiscal year ended _____________________, will be limited to the following procedures except where those procedures are extended as directed by you in writing. Any such additional procedures shall be attached to this letter and become part of the engagement.
The Table of Recommended Minimum Examination Guidelines will be used in our examination. In completing the Accountant’s Report , we will select a month of our choice within the fiscal year. The month selected (hereinafter referred to in this report as the “selected month”) will be reported to the Real Estate Council of Alberta and used for the purpose of completing procedures 2, 3, 4, 6, 7, 8, 9, 10, 11 and 15 of the Accountant’s Report . The procedures we will carry out are as follows.
1.Review the trust bank reconciliation and trust liability reconciliation (to determine whether there are sufficient funds in the depositories to meet the trust liabilities) for each of the twelve (12) months in the fiscal year ended _________________, and ensure that
(a)listings and reconciliation had been prepared for each month,
(b)there were no unreconciled differences, and
(c)each trust reconciliation was dated and bore the signature of the agent or designated representative.
2.For the selected month, review a number of trades in real estate. Determine that they were entered in the agent’s trust ledger accounts with supporting records and that they indicate
(a)the nature of the trade,
(b)a description clearly identifying the real estate involved,
(c)the true consideration for the trade (in the case of lease or rental, expressed on an annual, monthly or other basis),
(d)the names of the parties to the trade,
(e)the amount of the deposit, rent, or other funds received and a record of the disbursement of them, and
(f)the amount of the agent’s commission or other remuneration and the name of the party paying it.
Note:
Trade in real estate includes a disposition or acquisition of a transaction in real estate by sale, purchase, agreement for sale, exchange, option lease, rental or otherwise.
3.Verify the information contained in the trust bank reconciliation at the end of the selected month.
4.Verify the information contained in the trust liability reconciliation (to determine whether there are sufficient funds in the depositories to meet the trust liabilities) at the end of the selected month.
5.Confirm directly with depositories as at ______________________, (fiscal year end date), all trust accounts disclosed in the Agent’s Representations to the Real Estate Council of Alberta. Agree the amount confirmed with the balances on the agent’s trust bank reconciliation and review the reconciling items on the bank reconciliation.
6.Compare trust ledger balances from selected trust ledger accounts to the listing of trust liabilities and compare selected balances from the listing to the trust ledger accounts, both at the end of the selected month.
7.Trace the details of the last receipt of the selected month and the first receipt for the next month from the trust liability records to the trust bank records to ensure that the entries were recorded in the appropriate month.
8.Trace the last five disbursements of the selected month and the first five disbursements for the next month from the trust liability records to the trust bank records to ensure that the entries were recorded in the appropriate month.
9.Trace the trust liability month-end balances of the accounts examined in procedures 7 and 8 above to the listing of trust liabilities applicable to that date.
10.For the selected month, trace a number of deposits from the trust ledger to the bank deposit books, bank statements and supporting records to ensure that the deposits were made within two banking days after their receipt or within any further period agreed to in writing by the parties to the trade.
11.Examine for the selected month disbursements from the trust accounts to determine whether the disbursements are in accordance with the terms of the trust governing the use of that money.
12.Scrutinize selected trust ledger accounts and report any debit balances greater than $100 that have arisen during the year.
13.Scrutinize the agent’s trust depository statements and passbooks covering the year for depositories disclosed in the Agent’s Representations to the Real Estate Council of Alberta and report all overdrafts during the year.
14.Determine by enquiry and observation whether the agent has a general account for funds other than trust funds.
15.Verify a number of receipts and disbursements in the general account for the selected month to ensure that they are not trust transactions.
16.Forward a copy of the Accountant’s Report to the agent and discuss the contents with the agent.
These procedures do not constitute an audit and therefore we will not express an opinion on the accuracy or completeness of the trust books, records and financial information provided, or as to whether there were any irregularities during the year which were not disclosed to us. However, we will report on the results of applying the preceding procedures.
In order that we may carry out this engagement, you will make available to us all books, correspondence with the Real Estate Council of Alberta and its Executive Director, records and accounts pertaining to the real estate firm for the fiscal year ended ______________. Your firm will also provide us with the following:
Agent’s Representations to the Real Estate Council of Alberta in the approved form duly completed and signed for the fiscal year ended ____________________,
Accountant’s Report in the approved form for our completion.
We will discuss the details of the completed Accountant’s Report with you and provide you with a copy of the report for forwarding to the Real Estate Council of Alberta.
Our fees for services rendered will be based on the time spent by us, plus any out of pocket expenses that we incur.
Please review this letter carefully, sign, date, and return one copy to us.
Yours very truly,
(Accountant, Accounting Firm)
(Signature of Accountant)
(Date)
The terms set out in the foregoing letter are hereby agreed to.
(Agent or Designated Representative)
(Signature of Agent or Designated Representative)
(Date)
