Top10

Top Ten Tips for Financial Records Management



  1. You must do a reconciliation of your trust and general accounts by the end of the following month even if you have no balance in either account.
  2. As part of the reconciliation, you must compare the balance shown on the Bank Statement for your Trust Account, as adjusted for outstanding cheques/deposits, with the balance shown on the Trust Listing to ensure that they are the same.
  3. You must not transfer funds to a third party without the written authorization of your client (unless pursuant to a Court Order or otherwise exempted). A lawyer’s signature is required before the transfer of funds from one file to another, even if both files are for the same client.
  4. You must obtain the client’s written consent to transfer trust funds from their file to a file for another client. Even if one file is for one spouse and the other file is for both spouses, or if one file is for an individual and the other is for the closely held corporation for which the client is the sole shareholder, director and officer. 
  5. If you receive cash on behalf of a client, the party bringing you the money must sign a duplicate receipt showing:
    • the date
    • the name of the person providing the cash
    • the amount
    • the client for whom the cash is received
    • the file number 
    • the signature of the person who received the cash

    You are required to make reasonable efforts to obtain the signature and if you are unable to do so, it is wise to note this on the receipt. 
  6. You must not transfer funds from trust to general to pay your account unless you have delivered the account to the client either before or concurrently with the transfer.  
  7. If you have only one Moneris account for processing credit card payments, you must deposit all credit card receipts into your trust account and cannot withdraw the money until the funds have cleared, even if destined for your general account. If withdrawn from the trust account, all fees for credit card use must be reimbursed to the trust account. The best arrangement for credit card receipts is to have two Moneris accounts, one for trust accounts and one for the general account. 
  8. Funds need to be deposited into the trust account on or before the next banking day. Best practice guidelines suggest funds should be deposited into the general account within five days.
  9. When a client deposits funds directly into your trust account, you must obtain written confirmation of the deposit from the client, including: 
    • the client’s name
    • the date of the deposit
    • the amount of the funds deposited
    • the reason for the deposit. 
  10. For all transactions, your financial records must show: 
    • the source of payment
    • the payee
    • the nature of the transaction
    • the client’s name 
    • any description 

BE AWARE: THE MOST COMMON FINANCIAL RECORDS ERROR OCCURS WHEN THE BANK TAKES SERVICE FEES FROM THE TRUST ACCOUNT, EVEN AFTER YOU HAVE ADVISED THE BANK NOT TO DO SO.  CHECK YOUR STATEMENTS CAREFULLY!

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