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Brokerage and trust audits

Every year the Commission Compliance Auditors conduct yearly trust audits on each brokerage in Nova Scotia. In addition to the trust audits, each brokerage is subject to a brokerage audit every three years. The brokerage audit comprises an in-depth review of the brokerage’s transaction files and records management. In 2008, the Compliance Auditors conducted 130 brokerage audits and 82 trust account audits. The results of these audits are categorized as follows:

In addition to the activities above, the Compliance Auditors completed an additional 10 audits resulting from a change of broker, a brokerage close-out, or a spot audit.

The trust and brokerage audits ensure brokerages comply with the standards and procedures for trust accounts and record keeping, which in turn protects the best interests of the public. The audits also help the Commission identify problem trends in the industry, which can then be addressed through continuing education courses and/or industry bulletins. While the Commission’s approach to audits factors heavily on education and correction, Brokers need to be aware that there are repercussions for failing to comply with trust account and records management requirements. Any brokerage that receives three consecutive “Needs Improvement” audits is subject to disciplinary action. In 2008, the Commission charged seven brokers on these grounds. The fines for non-compliance begin at $500.00, but increase with each offense and can, in more extreme situations, result in licence termination.