TICO Trust Accounting Requirements 4 — Questions and Answers
Question 1: Under TICO regulations, when a travel agent receives a client's deposit, within how many days must it be deposited into the trust account?
- Immediately on the same business day
- Within 2 business days of receipt (Correct answer)
- Within 5 business days of receipt
- Within 30 days of receipt
Correct answer: Within 2 business days of receipt
TICO regulations require that client funds be deposited into the registrant's trust account within 2 business days of receipt.
Question 2: A travel agency uses trust funds to pay an office utility bill due to a temporary cash-flow shortage. Under TICO rules, this action is:
- Permitted if repaid within 30 days
- Permitted with written client consent
- A prohibited misappropriation of trust funds (Correct answer)
- Permitted if the amount is under $500
Correct answer: A prohibited misappropriation of trust funds
Trust funds belong solely to clients and may never be used for operating expenses regardless of intent to repay.
Question 3: Which of the following transactions would be a proper withdrawal from a travel agency trust account?
- Paying the agency's annual TICO registration renewal fee
- Remitting funds to a supplier for a client's confirmed booking (Correct answer)
- Covering payroll for the agency's sales staff
- Paying for the agency's advertising campaign
Correct answer: Remitting funds to a supplier for a client's confirmed booking
Trust funds may only be withdrawn to remit to suppliers for client bookings or to refund clients — not for agency expenses.
Question 4: An Ontario travel agency has a trust account deficiency discovered during a TICO audit. What is the most likely immediate consequence?
- A written warning with a 90-day correction period
- Suspension or revocation of the agency's registration (Correct answer)
- A mandatory training requirement for all staff
- A fine of $100 per day until corrected
Correct answer: Suspension or revocation of the agency's registration
A trust account deficiency is a serious violation that can lead to immediate suspension or revocation of the agency's TICO registration.
Question 5: Under TICO's trust accounting rules, which type of account is generally acceptable for holding client travel funds?
- A personal savings account held by the agency owner
- A designated trust account at a recognized financial institution (Correct answer)
- A money market fund account in the agency's name
- Any account clearly labeled 'client funds' by the agency
Correct answer: A designated trust account at a recognized financial institution
TICO requires that client funds be held in a designated trust account at a recognized Canadian financial institution.
Question 6: A travel registrant sells a tour package and collects the full payment 11 months before departure. Under trust accounting rules, these funds must:
- Be invested in a GIC and interest kept by the agency
- Remain in trust until remitted to the supplier or refunded (Correct answer)
- Be released to general revenue after 6 months if no dispute arises
- Be held only until the final payment deadline passes
Correct answer: Remain in trust until remitted to the supplier or refunded
Client funds collected for future travel must remain in the trust account until properly remitted to the supplier or returned to the client.
Question 7: Which record must a TICO-registered travel agent maintain to demonstrate compliance with trust accounting requirements?
- A daily diary of all client phone calls
- A trust account ledger reconciled monthly (Correct answer)
- A weekly profit-and-loss statement
- An annual letter from each client confirming receipt of services
Correct answer: A trust account ledger reconciled monthly
Registrants must maintain a trust account ledger and perform regular reconciliations to demonstrate that client funds are properly accounted for.
TICO Trust Accounting Requirements 4
Under TICO regulations, when a travel agent receives a client's deposit, within how many days must it be deposited into the trust account?