Winding Up Audits for Property Practitioners

My name is Constance Kawelenga and I am a registered Chartered Accountant and Auditor, and today we’re going to talk about winding up audits. 

To de-register an estate agency firm, the auditor needs to submit the following: 

Submit a closing/winding-up audit report.

What is a “winding up report”? 

A winding up report is the final closing report that is submitted by the estate agency’s auditor and is meant to cover the period between the audit report submitted to the PPRA for the financial year-end prior to the closure of the trust account and the date of closure of the trust account.

This is always required when closing an estate agency firm (i.e. when deregistration from the PPRA is requested) or where a trust account has been closed. 

There isn’t a specific prescribed format of the winding up audit report, which means that, for the period between the last audit date and the winding up date, the auditor will still cover both the business side of the agency’s transactions, as well as performing specific procedures that cover the fiduciary aspects of holding third parties’ funds in trust. 

On the business side, the auditor will perform sufficient appropriate audit procedures for them to issue an opinion regarding the income statement transactions during that period and balance sheet at closure date. 

On the trust side, the auditor will still report, for that period, on the:  

  • Compliance with Sections 54 and the relevant sub-sections of this section 
  • Section 48 as it relates to the Fidelity Fund certificate;  
  • and Section 28 of the Financial Intelligence Centre Act as it relates to the Property Practitioner’s Financial Intelligence Centre (FIC) registration. 

They will still report on the interest transactions, in particular, total interest earned, less whatever interest is payable to clients through express written mandates, and the balance being payable (or should already have been paid) to the PPFF.

Bank letter 

The winding up audit report is to be accompanied by a bank letter confirming the date of closure of the trust account. 

Audit report on the PPRA Portal 

The auditor also submits an electronic audit declaration on the PPRA portal confirming the work they have done, evidence obtained, conclusions and exceptions noted.

They will also attach supporting documents, in particular the audit report and any other documents they deem fit. We normally just attach the bank closure letter as well as the estate agent’s closure letter provided to the PPRA. 

Its important during the audit for the auditor to note that all the trust monies have been dealt with properly and that all trust creditors have been settled or otherwise dealt with properly (eg transfer to another agent) before closure, and the estate agent needs to state this in writing. 

Whats interesting is that the PPRA states a requirement for “The return of all current year original Fidelity Fund Certificates”, but in reality only the PPRA can rescind these which is done following the closure application process.