TICO - Travel Industry Council of Ontario Trust Accounting Requirements Questions and Answers

Question 1

According to Ontario Regulation 26/05, what is the maximum amount of time a TICO registrant has to deposit customer funds into their designated trust account after receiving them?

Accepted Answer

Within two banking days

Answer

Section 27(3) of Ontario Regulation 26/05 explicitly states that a registrant must deposit all money received from customers for travel services into their trust account within two banking days of receipt to ensure the funds are protected promptly.

Question 2

A travel agency owner needs to pay the monthly office rent and temporarily uses funds from the customer trust account, intending to replace them when a large commission cheque clears. This practice is known as what?

Accepted Answer

Commingling, and it is a serious breach of the regulations

Answer

Using funds from the trust account for any purpose other than paying suppliers for that specific customer's travel or issuing a refund is strictly prohibited. Mixing trust funds with general operating funds is called commingling and is a major violation of the Travel Industry Act, 2002.

Question 3

Which of the following represents a permissible disbursement from a TICO registrant's Travel Industry Act Trust Account?

Accepted Answer

Transferring funds to a supplier to pay for a client's cruise

Answer

Funds in a trust account belong to the customer and can only be used for two main purposes: paying the supplier for the travel services the customer purchased, or refunding the customer. All other expenses must be paid from the agency's general operating account.

Question 4

An agency's trust account has earned $50 in interest over the past quarter. According to TICO's trust accounting rules, who is entitled to this interest?

Accepted Answer

The travel agency, which can transfer it to the general account

Answer

While the principal funds in the trust account belong to the clients, any interest earned on those funds belongs to the registrant (the travel agency). The agency can and should transfer this interest to its general operating account.

Question 5

A registrant performs a trust account reconciliation and discovers the total trust liability (money owed to customers/suppliers) is $50,000, but the trust bank account only holds $48,000. What is this situation called?

Accepted Answer

A trust deficiency

Answer

A trust deficiency occurs when the total trust assets (cash in the bank) are less than the total trust liabilities (what is owed to customers and suppliers). This is a serious violation that must be rectified immediately, as it means not all customer funds are protected.

TICO - Travel Industry Council of Ontario Practice Test

TICO - Travel Industry Council of Ontario Practice Test

TICO - Travel Industry Council of Ontario Trust Accounting Requirements Questions and Answers