Whether you're a legal practitioner in British Columbia, Manitoba, Ontario, Alberta or Saskatchewan, it's probably a good idea to be well-aware of what law societies are expecting and regulating once they audit you, which happens quite often.
Like an equipment inspector lifting the hood to a work vehicle, regulators are going to be unhappy if integral elements to financial management are completely missing or working improperly.
A law firm should run like a well oiled machine, and in order to pass a financial review, your firm must be attuned to general, trust, and procedural accounting. We’re going to break down these three main components auditors are inspecting once they dig into your financial practices to see if you deserve to keep your license.
The general account of your business should have a general ledger, a fee book, and an expense book to go along with it. You’ll also need a disbursement and expense journal as well.
Every thirty days a firm should be reconciling its general account as part of its regular financial management protocols. Reconciling your general account might take about three hours if you're doing it by hand, but with the assistance of software, reconciliation statements can be produced in less than ten minutes.
At the end of the day, every single dollar and cent of your trust account should be matched to a client trust listing therefore reducing the balance to zero once all the money is accounted for.
After all, none of this pile of money is yours anyway.
So in a way it’s pretty basic. But you should also be producing a well produced client trust ledger, trust receipts, and solid maintenance of disbursements as well and a well maintained client trust listing.
Just look at number 11 and 12 of the Basic Management Checklist.
Similar to your general account, auditors are also expecting to see your trust account being reconciled on a monthly basis. Software can make this process take no time at all and its something our clients are actually doing every week.
If you have a look at page 22 of LSUC’s Basic Management Checklist you’ll see that deposit slips and receipts should be recorded in addition to producing evidence of having filled out form 9A.
It isn’t easy, profitable or enjoyable to prepare and produce myriad forms and paper trails five days before an audit. Thankfully firms can surrender these obligations and let automation and algorithms piece together a strong, digital audit-proof foundation for your firm.
uLaw Practice, a practice management and legal accounting software, is offering a 30-day free trial of its software. It’s built to digitally satisfy everything an auditor wants to see on paper. This goes for practitioners regulated by the Law Society of British Columbia, The Law Society of Alberta, the Upper Canada Law Society, and all other provincial jurisdictions in Canada.