Estate agent and Letting agent Audits

The new audit report that has to be submitted by every estate agent and letting agent in South Africa has some very onerous requirements. Neither the auditor nor the enforcement division at the EAAB has discretion in how the requirements are applied.

The business practices and accounting records of an agent have to comply with the following:

1. Financial records that comply with IFRS or IFRS for SME’s have to be maintained.
2. The financial records must be audited within four months of the agent’s financial year-end.
3. A client ledger must be maintained to account for amounts owed to and by clients. The ledger must be reconciled every month.
4. The balance of the trust bank account may never be less than the balance owing to clients according to the client ledger.
5. The agent must have a valid Fidelity Fund Certificate.
6. The agent must be registered with the Financial Intelligence Centre.
7. All cash transactions over R25,000 must be reported to the Financial Intelligence Centre.
8. The agent must have a separate trust bank account. The name of the bank account in the bank’s records must contain a reference to section 32 of the Estate Agency Affairs Act.
9. All client monies must be deposited in the trust bank account. (This includes the monthly rental received by letting agencies.)
10. 50% of the interest earned by the agent on trust monies (excluding interest earned on express mandates to invest the monies for the account of the client) must be paid to the Fidelity Fund.
11. Client monies in trust bank accounts may not be disclosed as an asset in the financial records of the agent.


The requirement that the financial statements of the agent have to comply with IFRS is particularly onerous. This increases the risk for the auditor and will result in higher accounting and audit fees.

The EAAB audit report contains simple statements that either confirm or deny that the above requirements have been met. If any of the requirements have not been met, the audit report must be qualified.

The EAAB enforcement division has confirmed that they have no discretion when they receive qualified audit reports. The matter must be referred to the Disciplinary Committee, which will take one of the following actions:

1) The Fidelity Fund Certificate may be withdrawn, in which case the estate agent must close down his/her business; or
2) The Fidelity Fund Certificate may be issued with specific conditions attached; or
3) A fine of up to R25,000 may be imposed.

We urge all estate agents and letting agents to familiarise themselves with the contents of the Estate Agency Affairs Act, and the EAAB audit report.

Contact us for advice on whether you comply with the requirements of the EAAB.