Jones Lang LaSalle fined $5000 for trust account audit breach

Jones Lang LaSalle is headquartered in the HSBC Tower (far right) at Commercial Bay.

Property consultancy, agency and leasing specialist Jones Lang LaSalle’s New Zealand office has been fined $5000 over problems auditing its trust account.

The Real Estate Agents Disciplinary Tribunal upheld a charge of unsatisfactory conduct and censured the business which is part of a global entity and issued the fine.

JLL is headquartered in this country in offices within the high-rise waterfront HSBC Tower, 188 Quay St, Commercial Bay.

Problems arose with auditing the company’s trust account when the firm switched from one auditor to another, the tribunal noted in its November 4 decision.

KPMG had been the auditors but JLL decided to undertake a tendering process for that role and Grant Thornton subsequently won the job.

It was in switching from one auditor to the other that problems arose, the decision said.

For most of the 2021 audit year, JLL was under the assumption that KPMG was continuing to audit its trust account.

But as it transpired, that was incorrect, the tribunal noted.

Witness statements were filed by JLL’s Marcelino Apolles and Lance Diedricks.

An original charge of wilful or reckless contravention of the law was amended to unsatisfactory conduct.

JLL did not deny that it should have realised much sooner that KPMG had failed to start its role as auditor and taken steps to appoint another auditor.

But it said it was relevant these breaches were not intentional, malicious, or even known of at the time.

The Real Estate Authority had reminded JLL about its audit report and JLL had told that Wellington-headquartered entity that it was changing firms.

Counsel for a complaints assessment committee of the Real Estate Authority said failure to comply with audit regulations is a potentially serious matter because the requirements to report as to the trust account on a monthly basis exist for the protection of the public.

This reason is a very important aspect of the disciplinary process, if the public lose confidence in a real estate agent’s ability to hold their money appropriately and in a well-regulated manner then the whole industry will suffer.

It is therefore appropriate that these breaches are treated seriously by the committee and by the tribunal, it was submitted.

JLL’s lawyers submitted the firm should only get a censure and be ordered to undergo training, not get a financial penalty.

While JLL accepted that the breaches occurred, they arose inadvertently because of miscommunication and a change in auditors. They submitted that JLL had already taken significant steps to correct this one-off mistake and ensure similar breaches do not occur again.

JLL now has new personnel, systems and processes to ensure events were not repeated.

They submitted that there is no need for any deterrence.

Grant Thornton had identified no subsequent issues since the 2021 year and confirmed JLL’s compliance with the law.

“We take into account that JLL admitted liability and cooperated with the authority at an early stage. JLL has no previous disciplinary history and we acknowledge that there have been no reports of any subsequent breaches of the audit regulations. We note that JLL have put new systems in place to avoid any breaches of the audit regulations in the future,” the tribunal said at sentencing.

But it was appropriate to issue a fine and that should be $5000, it decided.

The agent who is JLL’s company officer is ordered to undergo training and educational courses on trust accountants.

Anne Gibson has been the Herald’s property editor for 24 years, written books and covered property extensively here and overseas.