What is client money?

Client money is any money coming into the control of a member in public practice, or any of the member’s personnel which are the property of a client.

It includes money that you and your personnel have no present entitlement.

This doesn’t include fee retainers. It also excludes money dealt with by an insolvency practitioner under any insolvency legislation for which a separate bank account is opened by a receiver, liquidator or similar person.

Keep it separate and safe

All client money must be handled in an account separate to your business funds.

This requires you to establish a separate bank account (or multiple bank accounts) where client monies are held in trust.

Alternatively, members may have authority to transact on client bank accounts either solely or in conjunction with one or more other people.

In either scenario, you must make sure:

• monies are dealt with according to the client’s instructions
• you keep adequate records of all transactions, and
• there are adequate internal controls and procedures in place.

In Australia, you also need to have your compliance with the requirements of APES 310 audited annually. You can access CA ANZ guidance to  assist with the audit requirement. 

Prior to years commencing 1 April 2024, Queensland members were also required to comply with the Queensland Trust Accounts Act 1973.

Setting up a trust account

You can use a separate trust accounts for each client or pooled trust accounts for multiple clients.

When you operate a trust account, you will need to provide statements to your client after the year-end date.

Arrangements should be put in place with a financial institution for any bank fees or charges on the trust account to be charged directly to the firm's general account.

The name of bank accounts opened as trust accounts must include the words “Trust Account”.   

CA ANZ provides guidance to assist members to set up and operate a trust account.

Being a signatory on a client bank account

Members sometimes act as a signatory on a client bank account. 

The standards apply when you or your staff have authority to transact on a client's bank account as part of the provision of services to that client. All requirements of the standards (including the need for an audit in Australia) apply. However, there is audit relief in Australian where a member does not operate a trust account and can only co-authorise transactions on a client bank in conjunction with the client.  In these circumstances a review (limited assurance engagement) rather than an audit (reasonable assurance engagement) is permitted. 

You don’t need to be formally appointed as a signatory for the standards to apply. If you have been given the means to transact on a client's account, such as being given a username and password, the standards apply.

The standard does not apply where you have authority to transact on a bank account in a capacity other than as the accountant to a client. For example, it does not apply where you are the director of a company and have authorised transactions in that capacity.