A practice review is an examination of a brokerage’s records and activities to assess compliance with statutory obligations. Similar to an audit, it evaluates accounting, record-keeping, and trust account practices, and may result in recommendations to strengthen controls, policies, or procedures. These reviews play an important role in supporting consumer protection and industry confidence.
Practice reviews are designed to support RECA’s mandate in the following key areas:
Provide meaningful service to industry members. Auditors work constructively with brokers to encourage sound accounting practices and procedures that meet the requirements of the Real Estate Act and the Rules.
Reduce claims against the Assurance Fund. Because all licensees share the cost of claims, identifying potential concerns before they develop into serious issues benefits both consumers and the industry as a whole.
Promote compliance with legislation. Reviews help identify activities that may fall outside regulatory requirements, supporting consistent, lawful, and professional business practices.
RECA recognizes that undergoing a practice review can feel stressful for brokerages. To support a fair and constructive experience, auditors are expected to conduct themselves in a courteous, professional, and approachable manner.
Auditors communicate findings clearly and provide explanations in a constructive way, with the goal of supporting compliance rather than creating unnecessary disruption. Review results are treated as confidential except in circumstances where misconduct is identified and formal processes are required.
Practice reviews help ensure brokerages comply with the Real Estate Act, the Rules, and brokerage accounting requirements. Reviews are risk-based, educational in nature, and designed to support compliance.
Brokerages may be selected for review based on factors such as:
- Brokers in their first year of operation
- Time since the last review
- Deficiencies in the annual accountant’s report
- Previous review findings
- Amount of trust funds held
- Brokerage size
- Information received from third parties (for example, reports of NSF trust cheques)
- Fiscal year end
- Location
RECA also conducts educational reviews for new brokers. These reviews are intended to help new brokers understand brokerage accounting obligations under the Real Estate Act. An auditor will examine trust account reconciliation processes and accounting practices and may recommend adjustments to support compliance.
A new broker may request RECA to conduct a courtesy practice review of their brokerage.
The Auditor typically contacts the broker in advance and works to schedule reviews at mutually convenient times. Flexibility may be more limited in remote locations.
Reasonable efforts are made to minimize disruption to normal business activities. Most reviews are completed in a single day, although timelines vary depending on brokerage complexity and record-keeping practices.
Property management reviews may require additional time when multiple accounts are involved.
The Auditor will make reasonable efforts to avoid conducting reviews during the year-end reporting period.
Auditors provide a list of required documents prior to the review. Brokerages that maintain records at the office generally require minimal preparation.
The individual responsible for maintaining brokerage accounting records must be available for the review. Broker attendance is not compulsory, but many brokers find participation beneficial.
The auditor will briefly discuss the brokerage’s business activities, policies and procedures with the broker or brokerage representative, and will review the brokerage’s books and records to confirm compliance with the requirements set out in the Real Estate Act and associated Rules
Following completion of the review:
- Discussion: Findings are reviewed with brokerage representatives in a constructive format
- Recommendations: Auditors may suggest corrective actions or compliance strategies
- Written Summary: A report outlining observations and findings is provided
- Ongoing Support: Brokers may contact auditors with follow-up questions
In rare cases involving serious concerns, matters may be referred to RECA’s Investigations team. Disciplinary proceedings may follow where misconduct is established.
Important: Minor breaches are common and typically addressed through guidance and corrective recommendations. Referrals occur only where concerns are significant.
Auditors may refer matters for further review when factors such as the following are present:
- Evidence of intent or recklessness
- Repeated concerns previously raised
- Potential for serious consumer harm (for example, a trust shortage)
RECA surveys brokers following the completion of practice reviews. Feedback consistently indicates that the program supports regulatory compliance, strengthens brokerage practices, and contributes positively to professional standards within the industry.