Summary of Code of Conduct for South African Sheriffs
Code of Conduct for South African Sheriffs: A Student's Guide
Introduction
Sheriff Trust Account Governance & Compliance explains how sheriffs must manage and report money and investments held for other people. This guide breaks down the rules for investing trust funds, reporting to clients and auditors, and handling trust accounts when a sheriff leaves office. You will learn what records must be kept, what auditors look for, and what happens during transfers of trust funds.
Key Concepts Broken Down
What is a trust account?
A trust account is a bank or interest-bearing account where a sheriff holds money or investments belonging to clients, separate from the sheriff's own business funds.
Investment mandates (what they are and why they matter)
- An investment mandate is written permission from a client that allows the sheriff to invest the client’s money outside the sheriff’s trust account or a bank trust account.
- The mandate must be obtained before the sheriff invests the client’s funds elsewhere.
An investment mandate is a written agreement from a client authorising the sheriff to invest the client’s funds under specified conditions.
Practical example: A client gives $1{,}000 to a sheriff to invest in a money market account at a bank. The sheriff must have a signed investment mandate before placing the money.
Protection of invested funds
- The client must be told in the investment mandate that invested money does not enjoy the protection of the Fidelity Fund unless it is later proven that the sheriff misappropriated the funds.
The Fidelity Fund is a protection mechanism that may reimburse clients only if money is shown to have been misappropriated by the sheriff.
Reporting to clients (annual reporting)
- Sheriffs who invest trust monies with a bank must report in writing to the client at least once every twelve months.
- The report must show income earned and capital movements during the period, and it must list any commission or charges the sheriff earned for services under the mandate.
Practical example: An annual statement shows interest earned, withdrawals, deposits, and a $20 commission charged by the sheriff.
Detailed client trust records
Sheriffs must keep a separate trust record and supporting documents for each client that show:
- Payments entrusted by the client for investment;
- Payments invested on the client’s behalf;
- Income and capital received for the client from investments;
- Payments made to the client from investments;
- Charges paid to the sheriff for services under the mandate.
Trust account record: a client-specific accounting record showing all receipts, investments, income, payments, and charges related to that client's funds.
Retention and access to records
- Accounting records and supporting documents must be kept so the sheriff can provide them to clients or the Board on request, up to the date the trust account is closed.
- Electronic records hosted offsite must be reasonably secured and remain immediately accessible to authorised persons from the sheriff’s office and to the Board.
- Sheriffs must report loss, theft, or destruction of records to the Board immediately in writing.
Practical example: If a sheriff uses cloud accounting, the files must be secure and the Board must be able to access them swiftly if asked.
Auditor access and audit procedures
- During an audit by a registered auditor, the sheriff must allow access to records and support materials and give the auditor authority to obtain necessary information.
- Auditors will:
- Ask the sheriff and staff questions;
- Test transactions to confirm they are trust transactions and supported by documentation showing origin and beneficiary;
- Check that deposits and withdrawals were for trust creditors;
- Confirm that transfers to the sheriff’s business account were only for amounts due to the sheriff;
- Scrutinise bank reconciliations and seek confirmations from banks as needed.
Auditor engagement: the process where a registered au
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Sheriff Trust Governance
Klíčové pojmy: Obtain a signed investment mandate before investing client funds elsewhere, Include a statement in the mandate that invested funds lack Fidelity Fund protection unless misappropriation is proven, Provide clients with a written report at least every 12 months showing income, capital movements, and commissions, Keep a separate trust record for each client showing receipts, investments, income, payments, and charges, Retain accounting and supporting documents accessible to clients and the Board up to account closure, Allow auditors full access and provide necessary authorisations and source documents, Ensure electronic records are secured and immediately accessible to authorised personnel and the Board, Prepare a final trust creditor list when ceasing operations and get auditor confirmation of payments, When another sheriff takes over, sign and confirm creditor lists and transfer unclaimed funds to the Board within three months, Obtain a bank certificate of nil balance confirming trust account closure and interest details, Auditors test that transfers to business accounts are only for amounts legitimately due to the sheriff, Report any loss, theft, or destruction of accounting records to the Board immediately in writing