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PPRA: Practice Note on Interest Earned on Property Practitioner’s Trust Accounts
- 26 August 2024
- Regulatory Compliance and Legislation
- South African Accounting Academy
Contradicting the PPA, this Practice Directive confirms the interest earned from a trust account must be split between the property practitioner and the PPRA on a 50:50 equal basis, except where parties to a contract of lease or sale agree in writing to whom interest earned, must be paid.
After auditing a trust account as contemplated in section 54(1)(a) of the PPA, the auditor should declare all interest earned in terms of such trust account.
Property Practitioners should submit their audits reports, 6 months after the end of their financial year; declare interest earned from such trust accounts; and pay over the 50% accruing to the PPRA to enable the efficient administration of the PPFF and the audit compliance process.
This Practice Directive applies to all property practitioners who are keeping and maintaining trust accounts in terms of section 54 of the Property Practitioners Act.
Compliance to this Practice Directive by such property practitioners is mandatory.
The purpose of this Practice Directive is:
- to provide guidelines on the administration of trust accounts by property practitioners.
- To set-out practical measures for the handling and treatment of trust moneys by property practitioners.
- To provide tangible guidelines on the treatment and payment of interest earned on trust accounts by property practitioners.
Click here to download the 8-page Practice Directive:
https://theppra.org.za/download.php?data_id=137613
Relevance to Auditors, Independent Reviewers & Accountants:
- The Property Practitioners Act is yet another piece of legislation that your clients must comply with, and which you must assess compliance with. If they don’t comply with the relevant laws and regulations, you have certain reporting obligations in terms of NOCLAR (NOn-Compliance with Laws And Regulations) – this could include reporting to management, qualifying your audit opinion, reporting a Reportable Irregularity, etc.
- As an auditor,independent reviewer and accountant, you may need to advise your clients who are property practitioners on compliance with the PPA and adherence to the latest communication and guidelines issued by the PPRA – to ensure that interest earned on trust accounts is correctly paid to PPFF.
Relevance to Your Clients:
- A property practitioner has a duty to comply with the Property Practitioners Act.
- Your clients who are property practitioners, must not only comply with the PPA, but they also have to adhere to the latest communication and guidelines issued by the PPRA – to ensure that interest earned on trust accounts is correctly paid to PPFF.