Start using this Workflow
Trust Accounting Checklist
Initial Setup and Configuration
Designate a trust account manager responsible for managing client trust funds.
Open a separate interest-bearing bank account for client trust funds, typically known as an IOLTA (Interest on Lawyers Trust Accounts).
Implement accounting software that is compliant with state regulations and bar association rules for trust accounting.
Client Trust Transactions
Deposit client funds into the trust account promptly upon receipt, ensuring funds are never mixed with the firm's operating funds.
Maintain accurate and detailed records for each client, including receipts, disbursements, and a running balance.
Perform three-way reconciliations regularly between the trust ledger balance, the client ledger balances, and the bank statement.
Compliance and Reporting
Review and understand the ethical rules and regulations regarding trust accounting set by the state bar association.
Prepare and file any required trust account reports with the appropriate regulatory bodies in a timely manner.
Ensure that the trust account is audited periodically, either internally or by an external auditor, to verify the accuracy of transactions and compliance with regulations.
Ongoing Management and Monitoring
Conduct internal reviews of trust account books and records periodically to identify any discrepancies or irregularities.
Educate all staff involved with trust transactions on the proper procedures and legal requirements for trust accounting.
Create a system for alerts or red flags that indicate potential overdrafts, misallocations, or fraudulent activity within the trust account.
