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July 28, 2024 - 7:00 PM
A luxury BC rental company has had its bank accounts frozen and its licence suspended after auditors couldn't work out how much money it had because its books were in such bad shape.
According to a July 25 BC Financial Services Authority decision, Rent it Furnished Reality, had endless shortfalls in its trust account with audits finding that the "level of inaccuracy and deception" made it impossible to know if it was carrying enough money in its accounts to cover its liabilities.
"Rent it Furnished has repeatedly provided BC Financial Services Authority with financial records that contain unexplained discrepancies, indicate a shortage of trust funds, and use 'plugs' in general ledgers to attempt to make the records add up to sums that the numbers on the ledger do not add up to," the regulator said.
The use of "plugs" is a box on a spreadsheet that appears blank but secretly contains a figure to make the numbers balance.
According to Rent it Furnished's website, the company is a leading provider of luxury rental properties in Vancouver, Toronto, Montreal, Ottawa and New York with more than 5,000 clients.
While going through the company's trust accounts the auditors found a $260,000 shortfall at one point, and books that showed different closing and opening figures from one month to the next.
The audit also found pooled rent payments dating back to previous years that hadn't been forwarded to clients.
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"Rent It Furnished has engaged in accounting practices that are such that BC Financial Services Authority is not able to determine whether Rent it Furnished is in fact holding the amount of funds in trust," the regulator said.
The company's poor accounting practices date back to 2016 when the regulator first took action against it.
In August 2023, it was fined $17,000 and ordered to submit its books every month to the BC Financial Services Authority.
The notice didn't provide any names but said the firm's head broker was fired and a new broker was taken on.
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However, the regulator said "despite that fact" the company's accounting remained inadequate.
The new broker told the Financial Services Authority he had been trying to hire a new financial controller but had been prevented from doing so by the company's director. The broker left the company a couple of months ago.
The regulator said while no complaints had been made by clients in the interest of protecting the public it is suspending its licence and freezing its accounts.
"I consider the fact that Rent it Furnished has been engaged in accounting practices in respect of its trust accounts that are... unethical, leads me to a conclusion that it is in the public interest to freeze those trust accounts," the regulator said.
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