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All licensed travel agents in Australia are required to have
both their financial statements and trust account audited and
submit a report to the Travel Compensation Fund (TCF). TCF
monitors the financial security of all licensed travel agents
and any persons, companies, etc., wishing to carry on business
as a licensed travel agent in the six states and the Australian
Capital Territory are required to be participants in the TCF. To
become a participant in the TCF, applicants must be able to
demonstrate they have sufficient financial resources to carry on
the business of a travel agent.
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All participants are required to renew their participation
annually, providing audited financial statements and a certified
Annual Financial Review return to confirm that they continue to
have sufficient financial resources. TCF issues distinctive
participant renewal certificates for display at travel agents'
offices.
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You are required to lodge Annual Financial Review (AFR) within
three months of your financial year end, unless another time is
specified by the Trustees. For example, if your financial year
end is 30 June, then you are required to lodge your audited
financial statements by 30 September.
The Trustees of TCF have the power to require audited financial
statements to be lodged earlier and more frequently.
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Yes. All Licensed Travel Agents in Australia are required to
join the TCF and participate in the annual audit (except in
Northern Territory, which has its own fidelity insurance
scheme).
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A Registered Company Auditor listed with the Australian
Securities and Investments Commission must audit the financial
statements in accordance with applicable Australian Auditing
Standards.
Michael Quinn is a registered company auditor (registered by
ASIC) and this allows Quinns to assist corporations in ensuring
their financial reports meet ASIC's regulations as well as
undertake the audit, making the reporting process a simple step.
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Essentially, the auditor will need access to all financial
records and documents relating to money held in a trust account.
It is best if you have this information already prepared, and
then meet with the auditor before the auditor starts any work.
More specifically, the auditor will require:
A full set of financial reports including:
- The profit and loss account (Statement of Financial
Performance);
- Balance sheet (Statement of Financial Position);
- Accompanying notes and directors declaration,
If you keep a trust account, the auditor will need:
- All trust account statements for the reporting period
- Trust account deposit books
- Trust account receipt books
- Trust account cheque butts or details of electronic funds
transfers
- Cash book (details of daily receipt and payment transactions)
-
manual and computer systems
- Monthly trust reconciliations records
- Trust account journals and client ledgers
- Monthly trust account trial balances and records of any
overdrafts.
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In order to meet TCF financial requirement, your financial
statements should disclose that you have:
- Sufficient amount of Net Capital and Reserves to meet
the minimum amount of Capital and Reserves
- Net Tangible Assets should be at least 1.5% of the
turnover
- Working Capital should be at least equal to one month's overhead
expenses.
In order to determine if your agency meets the financial
requirements, TCF have developed four tests that your financial
statements must pass under the following sections:
1.
Trust Account
2. Working Capital
3. Net Tangible Assets
4.
Net Capital & Reserves.
You will need to score a minimum total of 10 points from Tests
1, 2 and 3 and in order to pass test 4 you are required to have
a sufficient amount of Net Capital and Reserves to meet the
minimum amount of Capital and Reserves.
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No - under normal circumstances it is not mandatory for an
agency to maintain a Trust account. However, you are encouraged
to do so and, in certain circumstances, the Trustees of TCF have
the power to require you to do so. If you maintain your Trust
account in accordance with the 9 rules listed below, 4 points
will be awarded in the TCF financial calculation for the
abovementioned tests.
The 4 points will only be awarded when the 'AFR' is lodged and
auditor certification confirms operation in accordance with all
of the following rules:
1.
A pre-numbered receipt must be issued for all payments received
in advance of travel arrangements, and monies banked within 2
working days of receipt into a separate bank account in the name
of the participant - titled 'Client Travel Account' or 'Client
Trust Account'.
2.
Interest bearing or term deposit accounts may be opened with any
recognised financial institution.
3.
Any such account mentioned above must be used exclusively for
client funds.
4.
All monies deposited to the client account must remain in the
client bank account until:
a) they are paid to principals on behalf of the client from whom
they were received; or
b) they are refunded to the client.
5.
Any such bank account must not be subject to a right of set off
or any encumbrance, including any floating charge.
6.
Commission earned is not to be withdrawn until the balance has
been paid to principals on behalf of clients. Cancellation
charges may be deducted from refunds.
7.
A disbursement from the client travel or trust account on behalf
of a customer who has not lodged funds (e.g. sale on credit) is
not permitted. Such a disbursement should be made from the
'general' or 'working' account of the participant.
8.
Use of client funds to finance loans or advances to related
parties or others is a breach of the conditions for maintaining
a client account.
9.
The client bank account and the liability for client funds held
should be clearly identified on the balance sheet, or in the
notes to the accounts, and in the 'AFR'.
Should there be Minor breaches of the above items, the Auditor
should attach an explanation detailing the areas of variance and
this will be considered in the assessment of points for this
test.
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A Registered Company Auditor listed with the Australian
Securities and Investments Commission must audit the financial
statements in accordance with applicable Australian Auditing
Standards.
Michael Quinn is a registered company auditor (registered by
ASIC) and this allows Quinns to assist corporations in ensuring
their financial reports meet ASIC's regulations as well as
undertake the audit, making the reporting process a simple step.
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Audit reports for corporations must be in the form required
under the Corporations Law and Statements of Auditing Practice
or Standards. Reports for non-corporate entities must comply
with Statement of Auditing Practice or Standards issued by the
Institute of Chartered Accountants in Australia and the
Australian Society of CPAs.
You need to lodge the following documents by the due date:
- Printed copy of AFR signed by participant and auditor; and
- Full set of financial statements with independent audit report;
and
- Submission of the Electronic AFR (e-AFR), via the TCF website.
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Yes, you can request an extension and pay a fee depending on the
length of extension you are requesting.
For example, if your financial year end is 30 June and you
request for extension in July or August, an amount of $110 is
payable. If you request the extension in September, the amount
payable is $330. Your extended due date for lodgement will now
be 31 October.
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If you carry on business without a licence you may incur
penalties of up to $50,000 or 12 months imprisonment, or both.
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Our dedicated team can assist you with all your auditing
needs.
Complete
and submit the Express Enquiry form on the top right hand side
of this page and we will contact you to discuss your enquiry
or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223
9166 to arrange an
appointment.
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