Why trust account audits exist
Certain professions handle money on behalf of clients. Attorneys hold settlement funds, estate agents hold deposit money, and body corporates hold levy contributions. The law requires these professionals to keep that money separate from their own funds, in designated trust accounts, and to have those accounts audited annually.
Trust account audits protect the public. They verify that client money is accounted for, that trust balances match the records, and that the professional has complied with the applicable legislation. Failure to comply can result in disciplinary action, fines, or removal from the register of practitioners.
This article covers the trust account audit requirements for three categories of professionals: attorneys, estate agents, and body corporates.
Attorneys: Legal Practice Act trust account requirements
The legal framework
The Legal Practice Act 28 of 2014 governs the trust account obligations of legal practitioners in South Africa. Section 86 of the Act mandates the maintenance of trust accounts for client funds.
Every attorney who practises for their own account must hold a valid Fidelity Fund Certificate (FFC) under Section 84(1). The FFC is issued by the Legal Practice Council (LPC) and is a prerequisite for lawful practice.
What the audit covers
The trust account audit is conducted in terms of the LPC Rules and the IRBA Guide for Registered Auditors on Engagements on Attorneys Trust Accounts. The auditor examines:
- Whether trust accounts were maintained in compliance with the Legal Practice Act and the LPC Rules
- Whether trust money was deposited promptly into the trust banking account
- Whether trust balances on the bank statements match the trust account records
- Whether interest earned on trust investments was correctly calculated and paid to the Legal Practitioners Fidelity Fund (LPFF) as required by Section 86(5)
- Whether transfers between trust and business accounts were properly authorised and documented
- Whether trust money was used only for the purposes for which it was received
The auditor is also required to consider fraud and theft risks specific to trust accounts, as outlined in the IRBA Guide.
Key compliance requirements
Attorneys must:
- Maintain trust accounts at a South African bank designated as a trust account
- Keep trust money separate from personal or business funds
- Deposit all trust money promptly into the trust banking account
- Maintain accurate trust account records
- Invest surplus trust money in interest-bearing accounts endorsed under Section 78(2A)
- Pay trust interest to the LPFF as required by Section 86(5)
- Submit the auditor’s report to the LPC within the prescribed timeframes
Consequences of non-compliance
The Legal Practice Council takes trust account breaches seriously. Court decisions from 2025 and 2026 illustrate the consequences:
- In LPC v Phogojane (2026), the attorney was struck from the roll for systemic misuse of trust funds and failure to lodge audit reports
- In Naude v LPC (2025), the court considered findings of trust account non-compliance including failure to invest trust monies in endorsed accounts and failure to deposit withdrawn funds promptly
Attorneys have a personal, non-delegable duty to account for all client funds. Ignorance of trust account obligations is not a defence.
Estate agents: Property Practitioners Act trust account requirements
The legal framework
The Property Practitioners Act 2019 (Act No. 22 of 2019) replaced the Estate Agency Affairs Act for estate agents. Section 54 of the Act requires annual trust account audits for business property practitioners who have not been granted an exemption by the Property Practitioners Regulatory Authority (PPRA).
Who must have a trust account audit
All business property practitioners (estate agents) who receive trust money from clients must maintain a trust account and have it audited annually. Exemption may be granted by the PPRA in certain circumstances, but the default position is that an audit is required.
What the audit covers
The auditor examines:
- Whether trust accounts were maintained in compliance with the Property Practitioners Act and its regulations
- Whether trust money was deposited into designated trust bank accounts
- Whether trust balances match the accounting records
- Whether transfers from trust to business accounts were properly authorised
- Whether interest on trust investments was correctly handled
The auditor’s report must be submitted to the PPRA annually as required by the regulations.
Key compliance requirements
Estate agents must:
- Maintain trust accounts designated as trust accounts at a South African bank
- Keep all client money in trust accounts until the transaction is completed
- Not mix trust money with personal or business funds
- Submit the annual audit report to the PPRA within the prescribed timeframe
Body corporates: trust account requirements
The legal framework
Body corporates are established under the Sectional Titles Act 95 of 1986 and governed by the Sectional Titles Schemes Management Act 8 of 2011. The managing agent or trustee of a body corporate is responsible for managing the body corporate’s finances, including trust accounts for levy contributions and other funds.
Trust account obligations
Body corporates that collect levies and hold funds on behalf of owners must:
- Maintain a trust account at a South African bank
- Keep levy contributions and other trust money separate from the body corporate’s general funds
- Maintain accurate records of all trust transactions
- Have the financial statements audited annually as required by the Sectional Titles Schemes Management Act
The audit of a body corporate’s financial statements includes the trust account component. The auditor verifies that trust money was received, held, and spent in accordance with the body corporate’s rules and the applicable legislation.
What the audit covers
The auditor examines:
- Whether levy contributions and other income were correctly recorded in the trust account
- Whether trust money was used only for authorised body corporate expenses
- Whether the trust account balance matches the accounting records
- Whether payments from the trust account were properly authorised
- Whether the body corporate’s financial statements present fairly the trust account transactions
Common themes across all three categories
Despite the different legislative frameworks, the trust account audit requirements share common principles:
Separation of funds. Client money must be kept separate from the professional’s own money. This is the fundamental obligation that underpins all trust account requirements.
Accurate records. Trust account records must accurately reflect all transactions. The auditor relies on these records to verify that trust money was properly handled.
Annual audit. All three categories require annual audit or examination of trust accounts. The audit is not optional, and failure to submit the audit report is itself a compliance breach.
Personal accountability. The professional who holds trust money has a personal duty to account for it. This duty cannot be delegated to staff or the managing agent.
Consequences of non-compliance. Trust account breaches can result in disciplinary action, fines, suspension, or removal from the register. The courts have shown willingness to impose severe penalties for trust account misconduct.
The bottom line
Trust account audits are a legal requirement for attorneys, estate agents, and body corporates in South Africa. They protect client money and verify that professionals comply with their fiduciary duties. The audit process is not a formality. Auditors examine trust account records, bank statements, and transactions to verify that client money was properly handled.
Professionals who maintain accurate trust account records and submit their audit reports on time avoid the disciplinary and legal consequences of non-compliance. Those who fail to comply face increasing scrutiny from regulators and courts.
SC Audit is an IRBA-registered audit firm based in Bellville, Cape Town. SC Audit’s partners Niel Schoeman, Simone Coetzee, and Hennie Meyer support attorneys, estate agents, and body corporates with trust account audits, statutory audits, and compliance services. Contact SC Audit to discuss your trust account audit requirements.
Frequently Asked Questions
Do all attorneys need a trust account audit?
Yes. Every attorney who practises for their own account and holds client funds must maintain a trust account and have it audited annually in terms of the Legal Practice Act 28 of 2014 and the LPC Rules. The auditor’s report must be submitted to the Legal Practice Council within the prescribed timeframe.
Can an estate agent be exempted from a trust account audit?
The Property Practitioners Regulatory Authority may grant exemptions in certain circumstances. However, the default position is that all business property practitioners who receive trust money must have their trust accounts audited annually. Exemption is the exception, not the rule.
What happens if I do not submit my trust account audit report?
Failure to submit the audit report is a breach of the applicable legislation and rules. For attorneys, the LPC can recommend disciplinary action. Court decisions have shown that persistent non-compliance with trust account obligations can lead to suspension or removal from the roll of legal practitioners.
What is the difference between a trust account audit and a financial statement audit?
A trust account audit focuses specifically on whether client money was properly held, recorded, and used in accordance with the applicable legislation. A financial statement audit examines the overall financial position of the business. Both may be required, but they serve different purposes and follow different procedures.
Who can perform a trust account audit?
Trust account audits must be performed by a registered auditor registered with IRBA. The auditor must have the competence to perform engagements on trust accounts as outlined in the IRBA Guide for Registered Auditors.