Message from the Chair, News Bulletin - October 10, 2019
Message from the Chair—Audit Program Update
Message from the Chair—Audit Program Update
As Chair of the Nova Scotia Real Estate Commission’s Board of Directors, I want to share with you the Commission's progress on revisions to the audit program. As you know, the Commission created an Audit Task Force in 2016 to review the entire audit program. The Task Force was struck in response to concerns brokers raised to the Commission about trust account and transaction file requirements; specifically concerns regarding inconsistency in how audit requirements were applied and a lack of clarity about what was expected of them.
The Audit Task Force worked toward developing a process that would be transparent and a rating system that centred on objective scoring.
When the Task Force recommended the new audit program to the Board of Directors, it made two statements. First, the audit program is a living document and may require change as experience is gained. Second, the audits during the first few months of 2019 would be used as a test to determine if the new process was working as intended.
In April this year, following the completion of over 50 audits, it was felt some of the results did not coincide with where the audit staff felt they should be relative to overall brokerage performance, and further, that there were some deficiencies discovered that had not been identified in the program. After review and discussion regarding the results, it was felt that the issue may be that the level of seriousness assigned to each discrepancy may be too heavily weighted with critical discrepancies or a combination of that and the rating system being too aggressive. As a result, the Audit Task Force recommended, and the Board of Directors agreed, that use of the rating system be discontinued for 2019 or until the Task Force could further evaluate the rating system and make recommendations to the Board. The audits themselves would be continued but without a rating assigned.
The simple fact is the majority of brokers are diligent in their duties and the good and the very good audit results achieved under the old audit program reflected that. The audit results of the new system also need to reflect that diligence. For the brokers who are less diligent, the new audit program provides them with a step-by-step road map of what they need to do to improve. The audit cycle also provides room for correction and education. Unless there are extenuating circumstances, no broker is penalized for one poor audit rating. It takes repeated poor audit ratings, with brokers receiving specific instruction on how to improve after each audit, to result in disciplinary action.
The Task Force has completed a review of the deficiencies and the level of seriousness assigned and the Board has approved those revisions. I can now let you know that this review resulted in a relaxation of the seriousness levels for a number of the discrepancies, which addresses some of the concerns that Brokers expressed relative to the original audit program provisions.
The revision of the rating system, which will provide brokerages with the overall result for their audit, has not yet been completed. It is anticipated that a very fair yet comprehensive rating system will be drafted, tested, and ready for implementation in early 2020.
It is important to keep in mind that both the Audit Task Force and the Board of Directors are made up of licensee and public members from across the province. The licensees performing this work and making decisions are subject to the same requirements as everyone else in the industry. These initiatives and decisions are not staff driven although staff is involved as requested. The Board believes this new program is vital for public protection and enhancing consumer confidence in our industry, whereby the standards of practice are high and licensees meet those high standards.
As we get closer to the end of the year, we will update you further.
Gary Morse, Chair
Nova Scotia Real Estate Commission
