IMPORTANT: Effective January 2025, the Commission replaced the Audit Program: A Guide to Real Estate Audits in Nova Scotia, with two separate policies, the Audit Policy and the Brokerage Transaction and Trust Account Policy. 

Audit Policy — Effective January 2025

The Audit Policy includes what a broker is to expect when having an audit: engagement, booking, audit, and audit results report.

Aufit Update Effective January 2025

Effective January 2025, the Commission administers the Audit Policy and the Brokerage Transaction and Trust Account Policy (replacing the previous Audit Program: A Guide to Real Estate Audits in Nova Scotia.)

Notable changes include the introduction of the electronic platform, SharePoint, as the new method for brokers with trust and trading activity during the audit period (form 1) to provide documents to the Compliance Officer. SharePoint is a secure platform that allows for sharing and storing documents. Just like a digital filing cabinet, it allows brokers to easily and securely submit documents. SharePoint is a Microsoft product and will be familiar to Microsoft Officer users.

The record keeping requirements for audits did not change. Brokers who do not have trust or trading activity will continue to submit form 2 or 3 as directed by the Compliance Officer.

Brokers no longer receive audit ratings for transaction file review or trust audits, however, brokers who receive consistently poor audit results will be referred to the Registrar. Discrepancies are no longer weighted by level (critical, serious or error).

Bulletins Regarding the 2025 Audit Updates

January 7, 2025 - Reminder: Audit & Record Keeping Policies Updates
November 4, 2024 – Broker Bulletin: Audit and Record Keeping Policy Updates and Broker Training
October 17, 2024 - Audit and Record Keeping Policy Updates and Broker SharePoint Training

Audits and Their Importance

The purpose of the Commission’s Audit Policy is to identify non-compliance, if any, with the brokerage’s trust and transaction records. The audit helps the Commission and the broker determine if internal controls the broker has in place are effective. Effective controls protect the public interest and reduces the risk to the brokerage.

Trust audits by the Commission are essential to protect the public interest. Audits hold brokerages accountable for their financial practices of the brokerage. By regularly auditing brokerages, the Commission can identify any irregularities or misconduct early on, allowing for corrective action to be taken promptly.

Audits cannot fix the past; they can only influence future performance. The approach is that audits are designed to be educational, unless the concerns are found to be repetitive year after year.

About Trust Audits

A trust account audit is a comprehensive inspection of a brokerage’s adherence to the regulatory requirements set out for trust accounts. The purpose of the trust account audit is to test a sample of trust account transactions processed through the brokerage to assess whether or not the brokerage followed Commission requirements for depositing and disbursing trust funds and for record keeping. A sample of transaction files involving trust deposits is selected, as well as individual trust records. General observations of the trust records are made and monthly bank statements are reviewed for any sign of trust shortages. Contractual information concerning each deposit is compiled from the transaction files and used to test the brokerage’s trust accounting procedures.

Each brokerage receives an annual trust audit. Additional audits may be required when a new broker becomes licensed, a brokerage closes, a brokerage changes brokers, or if a spot audit is required in response to compliance concerns.

A typical trust account audit has two components:

1. Review the trust account bank statements and the four record keeping requirements for compliance.
2. Review a random sample of historical trust account transactions processed through the brokerage to assess whether the brokerage followed Commission requirements for depositing, recording, and disbursing trust funds.

About Brokerage Audits

The typical brokerage audit includes both a trust account audit and a review of a sample of historical real estate transaction records. Transaction records are selected at random and reviewed to ensure paperwork is accurate, complete, and filled out in compliance with the Act, the By-law and the Policies (in particular, the Commission’s Audit Policy and Brokerage Transaction and Trust Account Policy). A brokerage audit is based on the contents of the records at the time of the audit. All required documents must be provided as directed by the auditor.

Brokerage audits are conducted every three years or as required, at the discretion of the Registrar and/or the Compliance Manager.

Audits for First Time Brokers

In the case of first-time broker applicants, the Registrar shall issue a conditional licence subject to the requirements set out in the Audit Policy for first-time brokers. The Commission shall conduct audits in accordance with the Audit Policy and upon satisfying the audit requirements, the conditions shall be removed. The audit schedule may be adjusted at the discretion of the Registrar.

Audits & SharePoint Training for Brokers

As of November 4, 2024, the Commission has made Audit and SharePoint Training available online for brokers as a resource on understanding and using SharePoint to provide audit documents. The training is intended for form 1 brokers who have trust and trading activity for the audit period. The training takes roughly 25 minutes. The training is also made available to new brokers licensing in Nova Scotia. The training remains accessible for brokers even after completion and includes resources to download for future reference. Brokers receive an email from TalentLMS with their login details.

The training is not a CPE course, and does not count towards mandatory education. Managing associate brokers or administrative staff interested in taking the training are welcome to do so. They can access the material directly using their broker's login credentials or the broker can share the course materials with them. 

Broker access to training: https://nsrec.talentlms.com