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Annual Trust Account Audit

Under the Legal Profession Act 2007 (“Act”) all legal practices in Queensland which operate a trust account must have their trust account examined by an External Examiner. With the External Examiner tasked with compiling a report, to be provided to the Queensland Law Society (QLS).

Whilst for any law practice, particularly a newly established practice, the thought of an External Audit having to be conducted on an annual basis may seem quite daunting and perhaps a tad overwhelming, the process really is quite simple, particularly if you appoint an experienced Legal Bookkeeper to assist with your firm’s External Examination.





What is involved and what do I have to do?

As indicated above, the external audit of your firm's trust account is an annual process, and part of your practice’s legal obligations under the Act. Each year law firms must engage and appoint a suitably qualified external examiner and advise the QLS of the examiner’s details prior to 31 March. If your practice is using the same external examiner that it has used in previous years, you will not need to advise the QLS.


Your practice will need to complete a Law Practice Declaration and Trust Money Statement (QLS Form 4) which will be incorporated in the External Examiner’s Report. Once your practice has appointed an external examiner, they will complete a full audit of your trust account, paying careful attention to all transactions such as any overdrawn ledgers, transit money, controlled and investment money, compliance with EFT payments guidelines and ensuring that your monthly trust reconciliations have been completed within 15 business days of the end of each month.


Once the audit has been completed, the external examiner will compile a report (QLS Form 5) which must be provided to the QLS by 31 May. A copy of the report will also be provided to your legal practice, which you can retain for your records. Should any breaches or non-compliance issues be identified the QLS will then make further contact with your practice and may request clarification or further information and depending on the breach/s in question, may request and book a follow up trust account review with yourpractice.


Who can conduct the Audit?

The external examiner who is tasked with completing the audit, must be registered as an auditor under the Corporations Act or such other individual listed under Section 65 of the Legal Professional Regulation 2017 (“Regulation”).


The Report - What does it include?

The report compiled by the external examiner will state whether your legal practice has complied with the relevant provisions of the Act and Regulation and will identify any ambiguities or non-compliance issues that have been identified as part of the audit process.


What happens if my practice is not compliant?

In the event that any minor breaches or non-compliance issues are discovered, as a result of the external audit process, you will be contacted by the QLS and advised of the breaches. You will then be directed to the QLS Trust Accounting Guide (“Guide”), and assisted through the correct procedure for correcting such breaches.


In addition to the above, if the breaches identified during the review are of a significant nature, your practice may then undergo a further trust account review by the QLS within a further six to twelve months and depending on the severity of the breaches, the QLS may commence a trust account investigation within the following 6 months.


If you are made aware of any breaches, it is your responsibility during the period between the review and the commencement of any investigation, to make contact with the QLS to correct any breaches and implement procedures to ensure continued compliance with the Guide into the future and to avoid the occurrence of any repeated breaches.


How can Legally Booked assist?

Legally Booked has over fifty years’ experience servicing the legal industry. We specialise in providing specialised bookkeeping services to legal practices for the purposes of trust and office accounting. We have a thorough understanding and working knowledge of legal bookkeeping and accounting principles and an understanding of QLS requirements.


In addition to our fifty years’ of industry experience, we also hold qualifications in both financial and legal services, and we are proficient in the use of LEAP (Legally Booked is a LEAP Certified Bookkeeper), Action Step, Xero and MYOB.


With our strong focus on compliance and high attention to detail, Legally Booked can assist your legal practice to maintain their trust accounts ensuring compliance, manage day-to day financial transactions, enabling you to focus on growing your practice.

With the March 31 deadline fast approaching, now is the time to ensure your trust account is ready to be examined.


 

LEARN MORE

Speak with Wendy today about how Legally Booked can help with the management of your Trust Accounts.


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