The Department of Real Estate performed 533 audits in the Fiscal Year ending on June 30, 2020. There were 166 with shortages or 33% of those investigated.
As always, the leaders were the Property Managers. One hundred forty eight out of the 348 audited had a total shortage of $4,720,363. That is an average of $31,894 missing.
Broker Escrows had 14 shortages from 62 audits and a total shortage of $542,735. Mortgage loans had 4 out of 52 audited and a shortage of $31,797 while Sales had no shortages out of 71 audits.
This does list the problems for which Trust Fund operators were sanctioned for not having check signers properly authorized, improper accounting methods and not doing the second reconciliation. When you reconcile your account monthly, you have to reconcile your book total to the bank total and then reconcile your book total to the total of what each party has in the account.
Personal aside: For almost two decades, Duane Gomer Inc. was a Syndication Company with extensive Property Management. Not as big as you present entrepreneurs but at one time I had around 120 apartment houses under control. 120 managers making deposits and our office paying bills and hoping that we never got audited.
For more information on this topic and on Licensing, Enforcement, Subdivisions, Legal, Audits, Legislative Updates, etc. go to the DRE website and download the outstanding Winter 2020/21 Bulletin.