Q.
Can a registered estate agency firm operate without a client's account?
A.
The correct answer is "YES!"
The provision of Schedule 8 of Rules, 1986 as extracted below prescribe the "Auditor's Report" as per:
Under Rule 59 as below:
59. Enforcement.
(1) Once in each period of twelve months every registered firm that holds out to the public as a firm or holds out to the public as a partner in a firm or a director of a company carrying on practice as registered firm shall deliver to the Board -
(a) a certificate as prescribed in the Eighth Schedule signed by the registered estate agent that during the accounting period covered thereby it did or did not receive or hold client's moneys; and
(b) if it did, an auditor's report issued by a firm of recognized professional auditors in the form prescribed in the Eighth Schedule relating to the accounting period.
(2) The certificate and, where relevant, the report under paragraph (1) shall be delivered to the Board not later than six months after the end of the accounting period to which it relates.
(3) The accounting period -
(a) shall begin at the expiry of the last preceding accounting period for which a certificate under paragraph (1) has been delivered;
(b) shall cover not less than twelve months; and
(c) shall where possible correspond to a period or consecutive periods for which the accounts of the registered firm are ordinarily made up:
Provided that in respect of a registered firm that commences or recommences to practice as a registered firm either as a sole proprietorship, a partnership or a body corporate or in respect of the first certificate, the accounting period may be for a period of less than twelve months.
(4) In the case of a registered firm that has two or more places of business -
(a) a separate accounting periods covered by separate certificates and separate auditor's reports may be adopted in respect of each place of business; and
(b) the auditor's report or reports delivered by such registered firm in each year shall cover all client's moneys held or received by it.
(5) The provisions of paragraph (1) shall, in the case of a firm carrying on practice as registered valuers, appraisers or estate agents be deemed to have been satisfied in respect of all registered valuers, appraisers or estate agents who are named in one certificate or in the auditor's report as being partners or directors of the firm concerned and who have signed the said certificate.
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Therefore, it is possible that a registered firm (esp. sole prop) prefers to do away with client's account and not needed to have an audited client's account for the purpose of renewal of annual practice license (Authority to Practice). The requirement is to sign the Certificate - under Sch 8 of Rules 1986, with reference to Rule 59 that there is no Client's Account and the firm is not holding out to public to receive client's moneys into client's account.
Here in the orange box, there is the sentence:
I/We did not receive or hold client's money and/or stakeholder's money as defined by Rule 2,
this "Rule 2" is
2. Interpretation
"client's account" means a current account or deposit account in the name of the registered firm at a bank in the title of which account the word "client" appears, or a separate account opened in the name of a person designated in writing by a client over which the registered firm has power of withdrawal on the signature of the sole proprietor or any partner, co-director or other authorized person connected with the registered firm;
"client's money" means money held or received by a registered firm on account of a person for whom the registered firm is acting either as agent or in any other capacity including that of stakeholder but shall not include money to which the only person beneficially entitled is the registered firm itself or money held in an account by the registered firm jointly with a third party, not being a client, and over which the registered firm does not have a power of withdrawal on the signature of the sole proprietor or any partner, co-director or other authorized person connected with the registered firm;
Summary:
A registered firm may operate without a client's account if so preferred, however during the yearly renewal, the firm's licensed agent has to sign the certificate under Schedule 8, Rule 59 to declare that the firm does not hold or receive any client's moneys.