If this is your first Adjustment DA, please review the Adjustment DA Guide to understand the process for correcting transaction errors through Adjustment DAs.
Adjustment DAs are used to correct production on a DA that was entered in a prior month. If the DA is in the current month, you will just correct/update the original DA. An adjustment DA is like doing a journal entry where when you take the initial DA and the adjustment DA and add the numbers together, you should end up with the final distribution of commissions.
If the DA is in the current month, you will correct/update the original DA.
The below example assumes you have issues checks to the Associate and those checks have already been cashed. Following the process as documented places balance due for the referral back in your clearing commissions account so you can cut the checks to the outside broker.
If you have the original check un-cashed, then you will void the original check in AE and enter $0.00 as the amount collected in the check box when posting the DA. When you void the original check in AE and write the new check for the correct amount, the difference stays in your clearing commission to write to each party owed.
Begin with a $0.00 balance in 50060
This is necessary to confirm when all steps have been completed correctly.
Step 1 / Page 1 – Closing Information
- Create a new DA
- Close Date: First day of current month
- Contract Date: First day of current month
- Adjustment Type: Regular
- Change to DA#: Original DA number
- Type: S - yes, use S even if it was a listing or dual agency
- Class: P
- Property Code: R
- Street Address: Adj to DA ####
- Click Save/Part 2
Step 2 / Page 2 – General Commission Information
Because you are not changing any of the numbers related to sales price or commission listed on the HUD, these entries are 0 to reflect no change.
- Price: 0
- Sales Commission: 0
- Unit: 0
- Outside Referral: input a positive number to add a referral not previously included in the DA; input a negative number to remove or reduce an outside referral amount
Because the original commission has already been recorded on a DP, only one “side” of the check transaction will be involved - Spend Money.
- Check For: 1
- Deposit #: enter a unique deposit number; Adjustment DAs should always be on a deposit by themselves
To remove an Outside Referral:
To add an Outside Referral:
Step 3 / Associate Detail Screen
- Add associate to DA
- Type: S
- Class: P
- Agency: B
- Unit: 0
- GCI: 0
- Keep tabbing through the detail screen, making sure to zero out E&O Insurance and any automatic deductions.
- Deduction(s): add the amount of the deduction (+$0.00 if the associate needs to pay someone or -$0.00 if the associate needs to be refunded) and select the corresponding deduction information
- Note the amount in the Associate Check field. If negative (adding a deduction), this is the amount the original agent owes back to the market center. If positive (removing a deduction), this is the amount the market center owes the agent.
- Click OK
Removing/Reducing a Referral – note the calculation of company dollar and royalty as positive numbers; this is correct and indicates that the market center will collect funds from the associate for the addition to GCI, in addition to receiving/collecting the original referral check issued to the referring brokerage.
Adding a Referral – note the calculation of company dollar and royalty as negative numbers; this is correct and indicates that the market center will issue overpaid CO$ and royalty to the associate, in addition to the referral check to the referring brokerage.
To change which associate is charged a referral fee, enter $0.00 on Page 2 in the Outside Referral field and then add both associates if changing who owes the fee or add the associate twice if changing which outside broker is paid the referral:
- First, use the remove referral steps for the associate who should not have been charged the referral fee
- Second, use the add referral steps for the associate who should have been charged the referral.
Both associates must be added to the Adjustment DA for the correction to take effect.
Page 2 – Complete the Deposit Balancing Information
To complete the terms on Page 2 to balance the Adjustment DA,
In the Check Box,
- Enter 0 in the first box
- Enter $0.00 in the second box
In the Reconcile Box
- Click into the first empty cell to reveal funds owed back to the market center
- Add “Pay to KW” in the Description field
Recording the Transaction
All DAs – regular and Adjustment – must be recorded in AccountEdge/LoneWolf even when no new funds are being received or issued:
- Save the DA
- Save the DP
- Import the DP into AccountEdge or Lonewolf
- Spend Money from 50060 where a positive amount is listed on the DA
- Receive Money into 50060 where a negative amount is listed on the DA
All funds must be accounted for. The originally issued funds will either be voiding when the original check is returned to be voided/reversed or the party writes a check back to the market center.
End with a $0.00 balance in 50060
Pay careful attention to the Royalty Exception effects of completing adjustment DAs. Run your Royalty Exception Report following each Adjustment DA posted and follow the instructions in How to Request a Franchise Royalty Adjustment to address an imbalance between your royalty accounts on your Income Statement well before transmittal.