An ‘irregularity’ refers to discrepancies, differences, inconsistencies or mismatches between two or more sets of information, records or documents. Irregularities can pose significant risks if not addressed promptly, as they could indicate accounting errors, operational ineffectiveness or, at worst, fraudulent activity.

Scenario — a trust account balance is $150,000, but the trust account ledger shows $148,000. The unexpected $2,000 difference suggests a transaction may not have been recorded correctly, or there might be unauthorised withdrawals; this warrants investigation. Another example is funds being deposited into the Sales Trust Account that should have been deposited to the Rental Trust Account.

A ‘deficiency’ is defined in the Act as “the non-inclusion or exclusion of the whole or any part of an amount that is required to be included in the account.” Practically, a deficiency is a shortfall in a trust account which causes, or would cause, the account to be overdrawn or technically overdrawn. The deficiency should be immediately made good by transferring the amount of the deficiency, e.g. from the property agent’s general trading account.