Law office management is important all the time. But the month of November is unique due to its timing.
Soon enough, Law Society auditors will be studiously observing and running analysis algorithms on top of the financial documents submitted by law firms for the end of the year.
While the accounting period for December might arguably appear to be more important than previous months, the month of November actually presents a very useful window of time for law office management professionals to ensure accounts are reconciled, up to date, with all funds accounted for and a trust error reading of “0” in preparation for December.
A law firm can have troves of data stored in its various ledgers, journals, fee books and spreadsheets. But without a proper reconciliation documentation, none of the accounting has been proven or balanced against the actual flow of money in and out of a firm’s bank accounts. Accounting needs to be proven, and this is why general and trust reconciliation statements are important and deserving of attention.
If a reconciliation statement for the month of December is produced and it contains a balance; it is indicating to auditors especially that there’s something wrong with your firm’s finances. It sends off unnecessary alarm bells which are worthy of further investigation by compliance and trust safety teams. Remember, these auditors exist so that the public can have faith in the legal profession.
Using the last week of November to handle all unfinished and unaccounted flows of money is a good thing. Reconciling your books, completely, before the month is finished leaves a law firm looking much better when it’s time to present itself to regulators.
Even if there are unforeseen trust errors encountered throughout November, a thorough attempt to get the books sorted before year-end reconciliation on December 31st will position a law firm for greater compliance and financial success.