10 Essential Tips to Stay on the Right Side of the Trust Auditor

10 Essential Tips to Stay on the Right Side of the Trust Auditor

An upcoming visit from a trust account auditor can be stressful for many law firms. The compliance part of operating a trust account can cause stress for many lawyers.

This article provides 10 tips for keeping your trust account that will dramatically decrease the stress around keeping your trust account.

This decrease in stress around the trust account will firstly get back those sleepless nights.

Secondly decreasing stress around your trust account frees you up to get on with solving the legal problems of your clients and increases your bottom line.


Remember who owns trust money

As we all know, Trust account money does not belong to you, it belongs to your clients. This is why there are so many rules around the record keeping.

Automate the record keeping

Don’t try and do it manually! No matter how small you are it will end up wasting time trying to balance things. Even trying to run a trust account in Excel is risking lots of wasted time finding errors!

Enter transactions today

You are too busy not to enter trust transactions IMMEDIATELY you are aware of them. You will be more aware of the detail of the transactions the day they occur more than at any other time.

Reconcile ASAP

Reconcile every month, as soon as possible after month end. If you have over 1,000 transactions per month, reconcile weekly as well.

Get help as soon as you know there is a problem

If you have an issue in your trust account and don’t know how to fix it – get help today – be it from your local Law Society, your accountant, or a trust accounting specialist, don’t delay! The sooner you fix it the easier it is to straighten out.

Recruit Experts

You have trained as a lawyer not an accountant if you are struggling, put your hand up for help.

Check your outstanding entries

Outstanding entries can often be a red flag of a mistake. If there are items outstanding on your bank reconciliation, make sure you know why they are not cleared through your bank account. The only thing that should really be on your bank reconciliation is a few cheques for the last week of the month that have not been presented. For those no longer using cheques, there shouldn’t be any outstanding transactions.

Return funds not needed to clients promptly

Once the matter is finished, return unused funds to clients promptly, preferably by depositing directly into their bank account. We recommend that you get the client bank account details at the beginning of the matter so they are on file. This stops any issues in cheques not being presented, or not having the details of where any refund of surplus funds should go.

Review the end-of-month bank reconciliation

Make sure you understand the reasons any items are listed as outstanding on that report. If they are not going to occur in the future, then they are mistakes that need correction.

Review the End of month Trial Balance

Review the end-of-month trial balance when you sign off. Make sure all matters on the list are current.


About me

Hi, My name is Karen McDonald, I am a business analyst and accountant with a passion and strong focus on efficient business systems to empower business owners to focus more delivering great value to their clients.

In 2011, I founded Wise Owl Legal Practice Management as a response to seeing so many lawyers caught up with the struggle of old out of date inefficient software. I believe software should lighten your load and empower you to focus on your core mission. As a qualified accountant and tax agent, many of you will know me from my consulting business commenced in 1997, Cascade Consulting Services Pty Ltd (Cascade).

Cascade has helped many businesses, including many law firms, over the last 20+ years, some in the software applications consulting space, others in the accounting and tax practice space as well. Fundamentally in our accounting business, we aim to empower our clients to better run their administration more efficiently; eliminate redundant processes, and understand their finances and lighten the load of compliance.

If you would like to learn more about how I could help your law firm become more efficient, please book a discovery call with me at https://wiseowllegal.com.au/contact/ or contact me at [email protected] or contact me by cell phone / mobile phone at +61 40 999 2317.

Mostly I am in GMT +10 time zone.

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Hello!  I am Karen McDonald, founder of Cascade Accounting & Tax and Wise Owl Legal Practice Management Software.  I have also been referred to as “The Wise Owl” Today I had a law firm client phone up my accounting practice.  Her trust account was out of balance....