Accountants hamstrung by banks on trust accounts

Banks are making it hard if not impossible for accountants to open trust accountants, according to evidence to the Accounting Professional and Ethical Standards Board (APESB).

The Institute of Public Accountants (IPA) has told the APESB that its public practitioner members have continued to experience difficulty in opening trust accounts, notwithstanding following APESB guidelines.

“Often this does not overcome the issues raised at the branch level of the financial institution concerned,” the IPA said.

It said particular issued encountered included:

• A lack of understanding that professional accountants that choose to directly handle client monies must do so via a trust account in accordance with APES 310. Financial institutions more commonly understand the need for solicitors and real estate agents to have trust accounts.
• Some financial institution branches have been found to guide accountants to open a separate transaction account, that is not a trust account, often insisting that trust accounts are not available for accountants.
• Some financial institution branches insist that the inclusion of the words “trust account” in the account name of the account is not required or cannot be facilitated.
• The above issues are sometimes exacerbated in areas where options to seek an alternative financial institution are limited and it is not possible to open a trust account online.

“It is fair to say over recent years there has been a general decline in the use of trust accounts by many practitioners. Some of that decline may relate to administrative costs outweighing the benefits of maintaining a trust account and/or the above issues encountered,” the IPA submission said.