Property-management trust bookkeeping must explain whose money is held, where it is held and which transactions changed each balance. A bank reconciliation alone cannot answer all three questions. Daxable's review starts with the records behind those balances, not a promise that a software report makes the firm compliant.
This guide covers bookkeeping controls, not a nationwide statement of trust-account law. The responsible broker and qualified advisers must confirm the rules applying to the firm's location, licence, agreements and activities. California DRE materials below are identified examples, not requirements imposed on every US property manager.
Are company funds and client funds separated?
Start by mapping bank accounts to their purpose: company operations, owner or property funds, and deposits held under the applicable arrangement. Trace where management fees move and who approves them. A transfer description such as 'owner draw' is not enough to establish the recipient's entitlement.
California DRE describes trust-account designation and restrictions on commingling, together with specific exceptions. Its rules cannot be reduced to 'any company money in a trust account is always prohibited.' Ask the responsible broker to document the approved account structure and transfer policy. A bookkeeper should flag uncertain transactions for review, not make the legal determination.
Does a bank match hide owner errors?
A control-account balance can agree with the bank while individual owner records are wrong. Look separately for receipts assigned to the wrong property, duplicate fees, payments charged to another owner and negative beneficiary balances. Review each exception before accepting an aggregate total.
Illustration only: Owner A should have $8,000 and Owner B $2,000. Posting $1,000 of A's rent to B changes their ledgers to $7,000 and $3,000. The total still equals $10,000, but an owner distribution based on those ledgers would use the wrong balances. Matching the grand total is necessary, not sufficient.
Are reconciliation differences being investigated?
Compare the adjusted bank balance, the control record and the supporting beneficiary records using the same cutoff. List outstanding items with dates, references and ownership. Follow receipts and disbursements to evidence rather than inserting an unexplained entry to make a report balance.
California's DRE reference explains monthly reconciliation of control and beneficiary records under Regulation 2831.2, with a no-activity exception. That is a California example, not proof that every state has an identical cadence. The deeper three-way reconciliation guide linked below explains the bookkeeping process.
Can each owner statement be traced?
Select an owner statement and follow its opening balance, rent receipts, charges, fees and distributions through the underlying records. Check that the reporting period and property mapping agree. A clean-looking PDF should not conceal an unsupported opening balance or an unexplained adjustment.
Keep supporting records at the detail needed for review. DRE's published audit forms distinguish the all-funds record from beneficiary and managed-property records. Software may organize these differently, so document how the reports connect rather than assuming their names establish equivalence.
Are deposits tracked through move-out?
Keep a deposit schedule that identifies the tenant, property, amount received, approved deductions, refund and unresolved balance. Record who authorizes a release and the evidence supporting it. Do not treat an unidentified deposit balance as company income because the tenant has left.
Deposit deadlines, interest and permitted deductions require jurisdiction-specific review. The bookkeeping schedule should carry the deadline supplied by the responsible adviser and retain the approval record; it does not determine the legal deadline itself.
What happens when a shortage appears?
Escalate an unexplained shortage or negative beneficiary balance promptly to the responsible broker. Preserve the original records, identify affected transactions and document the investigation. Do not transfer another client's money or post a plug merely to remove the warning. Any funding, correction or notification decision needs authorized review.
Daxable can assess the recordkeeping problem and scope reconciliation or historical cleanup. Access, review ownership and deliverables are agreed before work starts. Daxable does not guarantee an audit outcome, take over the broker's licensing responsibilities or provide legal advice.
Which records help scope the work?
Bring recent bank statements, the control ledger, beneficiary balances, owner statements and the list of unresolved items. Include the last period that was reviewed and agreed, not just the latest report. This helps distinguish an isolated posting error from a missing-history problem.
If accounts do not reconcile, start with bookkeeping cleanup. If the figures reconcile but reviews, approvals or reporting responsibilities are inconsistent, discuss controller oversight as a separate scope. The need determines the engagement, not the number of properties alone.
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Frequently Asked Questions
Does reconciling the bank prove each owner's balance is right?
No. Money can be assigned to the wrong owner while the combined total still matches. Review beneficiary detail and transaction evidence as well as the bank reconciliation.
Is monthly three-way reconciliation the same legal rule everywhere?
This guide does not make that claim. California DRE describes its own reconciliation requirement and no-activity exception; confirm the rules for the firm's jurisdiction with the responsible broker and advisers.
Can a balancing entry fix an unexplained difference?
Not without evidence. Identify the transaction or opening balance causing the difference, document the approved correction and retain the review trail.
What can Daxable help with?
Daxable scopes property records, reconciliation and cleanup, with controller review available separately. The engagement does not replace the broker's responsibilities or legal advice.