b'Mortgage Industry Information, Opinions & TipsDRE Audits and You:Part 2What to Expect on the First Dayirst day, you say?Doesnt an auditThere will be an exchange of business cardslicensed by the DRE as a Salesperson or a take just ONE day?Well, no, not by abetween the broker and the auditor andBroker-Associate under contract to the long shot.Unlike typical DRE audits inthe auditor will check to see if the brokersbroker or an employee of the broker who past years, it will probably take anywhereDRE license number (and NMLS number,has an acceptable fidelity bond in the from three days to several weeks.Asif applicable) is on the card.He/she willmaximum amount of monies held in the Ive written before, some audits can takealso check to see that the number(s) areaccount at any time.These additional months to complete.DRE supervisorsno smaller than the smallest font used onsigners must also have a written agreement now encourage auditors to spend morethe rest of the card.It is important that thewith the broker allowing them to sign on time in the field and the number ofBroker of Record has a business card andthe trust account.days auditors spend in brokers offices hasthat any non-licensed employees do not increased substantially over the years.Anhave titles or DRE numbers on cards whichNext, the auditor will ask for all contracts auditor generally isnt in your office everyimply that they may be doing work whichwith Salespersons or Broker-Associates single day, but having both the openingrequires a license.It is also important toworking for the broker/corporation (note interview and the exit interview held onmake sure that the company name andthat the broker is no longer required to the same day is extremely rare. address match those filed with the DRE. keep copies of agents licenses).For either a Salesperson or a Broker-Associate, the The first step is the opening interviewAt this time the auditor will ask if thereoriginal contract/commission agreement during which the auditor goes over aare any trust accounts being used by themust also be retained at the main worksheet of questions that the broker willcompany.If so, the auditor will want to seeoffice.It is important to note that these be asked to answer.The broker doesnta certified copy of the signature card(s) forcontracts and commission agreements need to be alone with the auditor, bythe trust account(s).He/she will check tomust be personally signed by both the way, and can request the presence ofsee that the account is in the name of thethe Designated Officer/Broker and the staff or an outside counsel or consultant.broker (corporation or dba), is in a Californiaindividual Salesperson or Broker-Associate.Questions on the worksheet include thechartered bank, is non-interest bearing type of business conducted by the broker/ and a non-analysis account (or if it is anThe auditor will request a log of transactions corporation, the ownership of the business,analysis account, that is fully disclosed tothat closed during the period of the audit and the volume of business closed in thethe investor/borrower), is designated as(which could be 6 months to 3 years, with last 12 months.This group of questionsa Trust Account, and that the Designated1 year being the most common).He/she gives the auditor a snapshot view of theOfficer/ Broker of Record is a signer on thewill choose the transaction files for review. business and helps him/her determine theaccount as broker, as trustee.Any other scope of the audit. signers on the trust account must be eithercontinued on page 29Page 28Summer 2020Points of Interest'