In today’s economic climate, well-managed bookkeeping procedures has become more crucial than ever. For most law firms, effective legal bookkeeping isn’t just about balancing the office accounts; staying informed and current with trust accounting is critical for clients and compliance with regulations.
For law firms holding trust money, monthly trust account reports such as the trust bank reconciliation, trust trial balance and trust account cash books are essential for maintaining accurate client ledgers and business confidence.
Trust Bank Reconciliation
This report ensures the trust account, cash book and individual client ledgers are balanced. By the end of the reporting period, the trust account bank balance shown on the bank statement, and trust account cash book balances should all match.
What to look out for: Check for discrepancies or adjustments (like a variance between the cash book and bank statement balance). If there are any, review the details and correct them ASAP to stay compliant.
Trust Trial Balance
The Trust Trial Balance Report summarises all client trust ledger balances to ensure they match the total amount in the trust bank account.
What to look out for: Look for variances at the end of the trial balance report, negative client trust ledgers, or client trust ledgers with no movement for over 12 months. Ensure details like client name and matter reference are included on the report.
Trust Account Cash Books
The Trust Account Payments Cash Book and Trust Account Receipts Cash Book record all transactions made to and from the trust account to ensure transparency and accuracy. These cash books capture essential details of trust money movements, including the transaction date and the date when the transaction was entered into the system, amount received or paid, and details of client and matter references.
What to look out for: Check that all transaction particulars have been accurately recorded and are in order. Ensure that transactions are entered with the required timeframe according to the law society rules.
You can view these reports anytime from your legal management system such as LEAP, Smokeball and Actionstep, but best practice is to prepare and review at the end of the month.
Once any errors or inconsistencies have been identified from the monthly reports, it can then be investigated and corrected promptly. And if assistance is needed, reach out to your legal bookkeeper.
Need to know more? Give Books Onsite a call today on 1300 2BOOKS or simply leave a message below and we can discuss all your legal bookkeeping needs.
