Victorian Bar Incorporated Clerks' (Audit and Trust Money) Practice Rules

Transcription

1 Victorian Bar Incorporated Clerks' (Audit and Trust Money) Practice Rules 28 November 2003

2 Contents 1. PRELIMINARY 3 2. APPROVED CLERKS 5 3. ESTABLISHMENT OF TRUST ACCOUNT 6 4. DEPOSIT OF TRUST MONEY WITH BOARD 7 5. TRUST RECORDS 7 6. EMPLOYMENT OF AUDITORS REQUIREMENTS OF AN AUDIT AUDIT DUTIES OF APPROVED CLERKS TRUST ACCOUNT DEFICIENCIES INVESTIGATION BY INSPECTOR 15 The Victorian Bar Inc. Owen Dixon Chambers East, Level 5, 205 William Street, Melbourne Victoria 3000 T: F: E: vicbar@vicbar.com.au

3 1. PRELIMINARY 1.1 In these Rules, unless the context or subject matter otherwise requires: - Act means the Legal Practice Act approved auditor means a person, other than a person to whom a direction under section 186(3) applies, who: (a) is a member of the Australian Society of Certified Practising Accountants, the National Institute of Accountants or the Institute of Chartered Accountants Australia; and (b) either (i) meets the requirements of one of those bodies to practise as a public accountant; or (ii) is employed by an RPA and meets the requirements of the rules (if any) made by the Board under section 199 for qualification as an inspector - - or both; and (a) has obtained a degree in commerce, accounting, business studies or a similar discipline from an Australian university or from a foreign university approved by the Board; and (b) has successfully completed any courses required by the Board under section 187(1)(a); and (c) has completed a trust account audit, as an employee or a principal, on at least two occasions (or such higher number as is prescribed) in the previous calendar year. - approved clerk has the meaning given by Rule associate includes a person who is a partner or employee or any other person acting as an agent. - audit year means the year ending on 31 October. - authorised bank means a bank that has an arrangement with the Board under section authorised society means a society that has an arrangement with the Board under section Bar Council means the Victorian Bar Council, a committee established under the Rules of The Victorian Bar Inc. - bank means: (a) a bank as defined in section 5 of the Banking Act 1959 of the Commonwealth; or (b) a bank constituted under a law of a state - that carries on business in Victoria. - Board means Legal Practice Board established by section deficiency means a lack of funds: (a) in an approved clerk's trust account generally as disclosed by the cash book or the other records of the approved clerk's business; or (b) a lack of funds credited to any client in a trust bank account, The Victorian Bar Inc. Victorian Bar Incorporated- Clerks' (Audit and Trust Money) Practice Rules Page 3

4 - but does not include any deficiency: (i) (which an approved auditor, or an inspector appointed under Rule 10.1, is satisfied was caused solely by bank error; or (ii) which an approved auditor, or an inspector appointed under Rule 10.1, is satisfied was caused solely by inadvertence and the deficiency does not exceed $100 and the aggregate of such deficiencies does not exceed $1000 in any 3 month period. - legal practitioner means a person admitted to legal practice in Victoria or an incorporated practitioner. - notify means notify in writing - prescribed means prescribed by directions or regulations made by the Board. - RPA means recognised professional association accredited under section regulated practitioner means a legal practitioner, registered interstate practitioner or firm that has been allocated to The Victorian Bar Inc. by the Board. - section means section of the Act. - society has the same meaning as in the AFIC (Victoria) Code. - sole practitioner means a legal practitioner (being a natural person) who engages in legal practice solely on his or her own account. - trust account comprises trust records and trust bank accounts. - trust bank account means an account held by an approved clerk with a bank or authorised society maintained by the approved clerk for the holding of trust money. - trust money means money paid to an approved clerk on account of legal costs in advance of legal services to be provided in the course of legal practice in Victoria. - trust records include the following: (i) copies of receipts issued; (ii) cheque butts or duplicates or their equivalent if the trust accounting system used by the approved clerk does not normally produce a cheque butt or duplicate; (iii) records of withdrawals by electronic fund transfers; (iv) duplicate bank deposit slips; (v) trust bank account statements; (vi) cash books and journals; (vii) trust ledger accounts; (viii) monthly statements reconciling the balance in the trust bank account with the trust cash books, and reconciling trust ledger account balances with the trust cash books; (ix) trust account statements; The Victorian Bar Inc. Victorian Bar Incorporated- Clerks' (Audit and Trust Money) Practice Rules Page 4

5 (x) paid trust account cheques held by the bank or society on behalf of the approved clerk; and (xi) files relating to trust transactions. Words: - importing the singular shall include the plural and the plural the singular; - importing the masculine shall include the feminine and the feminine the masculine; - referring to any statute or regulation are to be read as though the words "as modified or substituted from time to time" were added to the reference; - defined in the Act have the same meaning when used in these Rules unless the context otherwise requires. 2. APPROVED CLERKS 2.1 The Bar Council may from time to time approve one or more natural persons to receive trust money on account of the legal costs of some or all of its regulated practitioners who are sole practitioners in advance of the provision of the legal services to which these costs relate. 2.2 (1) Subject to Sub-Rule (2), the Bar Council may cancel or suspend for a specified period its approval for a clerk to receive trust money if the Bar Council is satisfied that the clerk: (a) has requested in writing that such approval be revoked or suspended; (b) has died or become of unsound mind or become a person whose person or estate is liable to be dealt with in any way under the law relating to mental health; (c) has become an insolvent under administration; (d) has been convicted in Australia or elsewhere of an offence involving fraud or dishonesty; (e) has, in the opinion of the Bar Council, seriously contravened these Rules and the clerk is not, in the opinion of the Bar Council, a fit and proper person to continue to be an approved clerk. (2) Before the Bar Council cancels or suspends approval under either paragraph (d) or paragraph (e) of Sub-Rule (1), the approved clerk shall be given an opportunity to show cause why the Bar Council should not cancel or suspend its approval for the approved clerk to receive trust money Approval under Rule 2.1 or cancellation or suspension under Rule 2.2 shall be in writing and notified to the Board as soon as practicable after it is given. A person approved under Rule 2.1, and the approval of whom has not been cancelled or suspended under Rule 2.2, is referred to in these Rules as an approved clerk. An approved clerk shall comply with these Rules. An approved clerk shall pay by the due date a contribution required to be paid under section 202(3) or a levy required to be paid under section 204. A person who has been an approved clerk must not receive trust money as an approved clerk after ceasing to be an approved clerk. The Victorian Bar Inc. Victorian Bar Incorporated- Clerks' (Audit and Trust Money) Practice Rules Page 5

6 3. ESTABLISHMENT OF TRUST ACCOUNT An approved clerk who is authorised to receive trust money shall establish a trust bank account in a bank or an authorised society in Victoria before receiving any trust money. If an arrangement under section 176 is in effect, the trust bank account shall be established and maintained in an authorised bank or authorised society. A trust account may consist of one or more separate bank or society accounts. Subject to Rules 3.5 and 3.6(3), an approved clerk who is authorised to receive trust money shall deposit any trust money received into the trust bank account as soon as practicable after receipt. Rule 3.4 does not apply if (1) the client to whom legal services are to be provided gives the approved clerk a written direction, before or at the same time as the approved clerk receives the money, to pay the money to another person, or in accordance with the direction of another person; and (2) the approved clerk complies with that direction. 3.6 (1) If an approved clerk receives trust money and is directed to pay the trust money in accordance with Rule 3.5, the approved clerk shall: (a) if the money is in the form of cash, pay the money in cash to the person due to receive it and obtain and retain a proper receipt for it; or (b) if the money is in the form of a cheque or draft transmit it or hand it over to the person due to receive it; and (c) make the following entries in a trust ledger account for the matter in respect of which the money was received: (i) the legal practitioner on account of who the money was received; (ii) from whom the money was received; (iii) the date on which the money was received; (iv) the amount received (which may be recorded in the narration column only); (v) the identity of the person to whom the money was paid; (vi) whether the money was in the form of cash, a cheque or draft; (vii) in the case of a cheque or draft, the name of the drawer; 6 (viii) brief particulars sufficient to identify the relevant transaction and any purpose for which the money was received; and (ix) the date on which the money was paid. (2) Transactions to which this Rule applies are not subject to Rules 5.2 and 5.4. The Victorian Bar Inc. Victorian Bar Incorporated- Clerks' (Audit and Trust Money) Practice Rules Page 6

7 (3) Nothing in this Rule shall require the recording of the payment of money to a person other than the approved clerk where that person is present at the time the money is paid and the payee receives the money. 3.7 An approved clerk may withdraw trust money from a trust bank account only: (a) in accordance with the Act and these Rules, to satisfy a claim that a sole practitioner has against a client for legal costs in respect of which the trust money was received; (b) in accordance with a court order against such a client; (c) for payment in accordance with Part II of the Unclaimed Moneys Act 1962; (d) for depositing with the Board under Rule 4 and Division 2, Part 6 of the Act for payment to the Public Purpose Fund; or (e) as otherwise authorised by law (including, without limitation, repayment of excess funds to the client on whose behalf the trust money is held in the trust bank account). 3.8 A trust bank account shall be conducted in the name of the approved clerk and shall include in the account title the words "Trust Account" immediately after the name of the approved clerk. 4. DEPOSIT OF TRUST MONEY WITH BOARD Each approved clerk shall deposit an amount that is 72% of the lowest daily balance of the trust bank accounts at any time during the audit year (the prescribed amount) with the Board out of the trust money received by the approved clerk. The deposit shall be made within seven days after the end of the first audit year in which the prescribed amount exceeds $3000. At all times after making a deposit under Rule 4.1 the approved clerk shall keep deposited with the Board an amount that is not less than 72% of the sum of: (a) the lowest daily balance of the trust bank accounts at any time during the current audit year or the preceding audit year; and (b) the amount held on deposit with the Board on the day of the lowest daily balance. 4.4 Money deposited with the Board under Rule 4.1 or Rule 4.3 shall be held by the Board on trust pursuant to section 181 and shall be repayable to the approved clerk on demand. 5. TRUST RECORDS 5.1 An approved clerk who is authorised to receive trust money shall, in respect of money over which the approved clerk has acquired possession or control, keep accurate accounting and other records: (a) in accordance with the Act and these Rules; (b) in a manner that at all times discloses the true position in relation to the money to which the records refer; and (c) in a manner that enables the records to be conveniently and properly audited. The Victorian Bar Inc. Victorian Bar Incorporated- Clerks' (Audit and Trust Money) Practice Rules Page 7

8 5.2 An approved clerk shall, for each sum of money received by the approved clerk, other than money received under Rule 3.6, make out as soon as is practicable a numbered receipt identified as the approved clerk's trust account receipt and specifying: (a) the legal practitioner on account of whose legal costs the money was received; (b) the client to whom the legal services are to be provided; (c) the date the money was received; (d) from whom the money was received; (e) whether the receipt was by cash, cheque or draft; (f) in the case of a cheque or draft, the name of the drawer; (g) the amount of the receipt; and (h) brief particulars sufficient to identify the relevant transaction, and shall retain a legible duplicate or its equivalent identically numbered with the original in proper sequence and in a secure manner An approved clerk shall not knowingly receive trust money or record a receipt of trust money in the approved clerk's trust accounts under a false name and if the person on whose behalf money is received is commonly known by more than one name, the approved clerk's trust account shall record all names, of which the approved clerk is aware, by which the person is known. 8 An approved clerk shall for each withdrawal of trust money from a trust bank account in accordance with Rule 3.7 draw a cheque on the trust bank account, complete the cheque duplicate or butt or its equivalent if the trust accounting system used by the approved clerk does not normally produce a cheque butt or duplicate in relation to that payment specifying: (a) the date of the payment; (b) to whom the cheque is made payable and, in the case of a cheque made payable to a bank or society, the name of the person entitled to the proceeds; (c) the amount of the payment; (d) the trust ledger account to which the payment is to be debited; and (e) brief particulars sufficient to identify the relevant transaction, and shall retain the cheque duplicate or but or its equivalent in proper sequence and in a secure manner. 5.5 (1) A cheque drawn on a trust bank account shall not be made payable to cash. (2) All cheques drawn on a trust bank account shall be crossed generally or specifically and marked "not negotiable" and once so marked, shall not be opened or endorsed to cash. (3) An approved clerk shall not do any other act within his business which has the effect of paying trust money to any person by way of cash, either by paying the trust money in cash or in any other manner. The Victorian Bar Inc. Victorian Bar Incorporated- Clerks' (Audit and Trust Money) Practice Rules Page 8

9 (4) This Rule shall not apply where a payment to be made from a trust bank account is required by law to be paid in cash. 5.6 (1) Sufficient details shall be entered in the Cash Receipts Journal or backing sheet and also in the Cash Payments Journal or backing sheet to enable adequate details of the transactions to be posted into the trust ledger account. (2) Separate journals shall be maintained for each trust bank account. (3) Where the trust accounting system used by an approved clerk produces a duplicate or its equivalent of a receipt or cheque and the information recorded includes details of the banking of money received and other information normally required to be entered in the Cash Receipts Journal or Cash Payments Journal respectively, the duplicate or its equivalent shall, if the approved clerk so wishes, be the Cash Receipts Journal or the Cash Payments Journal. 5.7 An approved clerk shall authorise in writing each transfer of money from one trust ledger account to another trust ledger account, and shall enter in a journal at least the following information: (a) the date of the transfer; (b) the trust ledger account from which the money is transferred; (c) the trust ledger account to which the money is transferred; (d) the amount transferred; and (e) the purpose of the transfer, and shall retain those journal entries in proper sequence and in a secure manner. 5.8 (1) A separate ledger shall be opened for each matter and shall contain: (a) the name and address of the client; (b) the name of the legal practitioner conducting the matter; (c) the name of any other party or other sufficient particulars to identify the matter; and (d) a brief description of the nature of the matter. (2) Sufficient details shall be posted into the trust ledger to enable the nature of the transaction to be clearly understood and shall include at least the following information: (a) the date of each transaction; (b) the name of the person from whom the money was received or to whom it was paid; (c) the purpose of the receipt or payment; (d) the amount received or paid; (e) the cheque number, receipt number or transfer journal folio number; and (f) the balance after each entry. The Victorian Bar Inc. Victorian Bar Incorporated- Clerks' (Audit and Trust Money) Practice Rules Page 9

10 (3) The ledgers established under Rule 3.6 shall form part of the trust ledger. 5.9 An approved clerk shall, within 21 days of the end of every month, prepare a statement reconciling: (a) the balance in the trust bank accounts with the approved clerk's trust cash books; and (b) the balances in the approved clerk's trust ledger accounts (identified by name or code number) with the balance of the approved clerk's trust cash books, - and shall retain the statement in an appropriate book (1) Subject to Sub-Rule (2), the following records which form part of the approved clerk's trust account shall be retained for not less than the following periods from the date of the final entry: (a) trust ledger accounts - 15 years; (b) cash books and journals - 7 years; (c) copies of receipts issued - 7 years; (d) cheque duplicates or butts - 7 years; (e) trust bank account statements - 7 years; and (f) files relating to trust transactions - 7 years. (2) Subject to instructions from a legal practitioner's clients in respect to any documents which are the property of the client, instead of retaining the documents referred to in Sub-Rule (1) an approved clerk may retain trust records in permanent form, being a form that is printed or is capable of being printed upon request. 6. EMPLOYMENT OF AUDITORS Subject to the Act and these Rules, an approved clerk who receives trust money shall, within one month after first receiving any trust money, appoint an approved auditor to audit the approved clerk's trust account. The Bar Council may require an approved clerk to terminate the appointment of an approved auditor if the Bar Council is of the opinion that for any reason the approved auditor may not properly perform his or her duties, but the approved clerk and approved auditor shall first be given an opportunity to show cause why the Bar Council should not require the appointment to be terminated. A person shall not, without the prior written approval of the Bar Council, be appointed or continue as an auditor of an approved clerk's trust account if he or she carries out work for that approved clerk, other than: (a) the auditing of any accounts maintained by that approved clerk on the approved clerk's own behalf or in behalf of other persons in connection with the approved clerk's business; and (b) advisory or consulting duties consequential upon his or her function as an auditor, which may include the preparation of income tax returns for the approved clerk. The Victorian Bar Inc. Victorian Bar Incorporated- Clerks' (Audit and Trust Money) Practice Rules Page 10

11 6.4 Unless the Bar Council otherwise resolves in respect to any particular circumstance, an approved auditor is disqualified from auditing an approved clerk's trust account if: (a) the approved auditor is, or at any time within two years before appointment has been, engaged in keeping any part of the trust account; (b) a member of any firm of which the approved auditor is a member is, or within two years before appointment has been, engaged in keeping any part of the trust account; (c) a member of the staff of the auditor is engaged in keeping any part of the trust account; (d) the auditor is, or at any time within two years before appointment has been, an associate of the approved clerk; (e) the auditor is a person closely related to the approved clerk by blood or marriage; or (f) the auditor is in business as an approved clerk. 6.5 (1) An approved clerk who appoints an auditor to audit the approved clerk's trust account shall, within 14 days after that appointment: (a) notify the Bar Council of the appointment; and (b) deposit with the Bar Council the written consent of the auditor. (2) An approved auditor who ceases for any reason to be employed, or is disqualified, from auditing an approved clerk's trust account shall notify the Bar Council within 14 days after that cessation. 6.6 (1) An approved clerk shall not cease to employ an approved auditor with a view to engaging another auditor unless the approved clerk first satisfies the Bar Council, by such evidence as the Bar Council requires in that particular case, that it is reasonable in the circumstances to do so. (2) Sub-Rule (1) does not apply where an approved auditor resigns, dies, retires from practice or is disqualified from auditing the approved clerk's trust account. (3) If an approved auditor: (a) resigns, dies, retires from practice, is disqualified under Rule 6.4; or (b) has with the consent of the Bar Council ceased to be employed by the approved clerk, an approved clerk shall appoint another approved auditor in his or her place within one month after that resignation, death, retirement, disqualification or cessation An approved auditor must not knowingly employ or engage a person to assist him or her in the conduct of an audit unless the person has satisfactorily completed a course required by the Board under section 187. If the Board is satisfied that an auditor has failed to comply with a direction issued under section 186(1), it may direct that the auditor no longer audit the trust records. The Victorian Bar Inc. Victorian Bar Incorporated- Clerks' (Audit and Trust Money) Practice Rules Page 11

12 7. REQUIREMENTS OF AN AUDIT 7.1 An approved clerk shall cause the approved clerk's trust records to be audited by an approved auditor in respect of each audit year, and the audit shall be conducted in accordance with the Act and these Rules. 7.2 (1) In carrying out an audit under these Rules, an approved auditor shall: (a) ascertain whether any trust bank account was kept by the approved clerk during the period covered by the audit; (b) make test examinations of any trust bank account and any statements relating to it during that period; (c) make a comparison as at two or more days (one to be the audit date and the other or others to be a date or dates during the period covered by the audit selected by the approved auditor without notice to the approved clerk) between: (i) the liabilities of the approved clerk to the clients of the legal practitioners on account of who the trust money was received and to other persons in connection with the legal practitioners' practice as shown by the approved clerk's trust account; and (ii) the balance standing to the credit of a trust bank account; and (d) make such checks and examine such accounting records (including records other than trust records) and such number of files representative of every part of the approved clerk's business as the auditor considers reasonable in the circumstances, to enable the auditor to express an opinion as to whether the approved clerk has complied with the requirements of the Act and these Rules during the period covered by the audit. (2) On or within one month after the date or dates selected by the auditor for the making of the comparison referred to in paragraph (1)(c), the auditor shall, without notice to the approved clerk, visit the approved clerk's place of business and shall examine the approved clerk's trust account An approved auditor may make copies of, or take extracts from, any records or other documents produced to the approved auditor in the course of the audit. An auditor shall notify the Bar Council as soon as is practicable if at any time he or she: (a) considers that any trust accounting records of an approved clerk are not being kept in such a manner as to enable them to be conveniently and properly audited; (b) becomes aware of a loss or deficiency of trust money or a failure by an approved clerk to pay or account for any trust money; (c) becomes aware of any failure by a solicitor to comply with any provisions of the Act or the Rules; or (d) considers any other matter arising in the course of an audit should be communicated to the Bar Council. The Victorian Bar Inc. Victorian Bar Incorporated- Clerks' (Audit and Trust Money) Practice Rules Page 12

13 7.5 A report of a loss or deficiency under Rule 7.4 shall provide at least the following information: (a) the date on which it occurred; (b) the amount; (c) how it occurred; and (d) the date and manner of any restoration. 7.6 Upon completion of the audit of an approved clerk's trust account and not later than four months after the audit date, the approved auditor shall: (a) sign an auditor's report in or to the effect of Form 1; (b) sign a certificate in or to the effect of the certificate in Form 2; (c) lodge the originals with the Bar Council; and (d) forward signed copies to the approved clerk. 7.7 The auditor's lodging of the report and certificate with the Bar Council shall be deemed to be a lodging by the approved clerk. 8. AUDIT DUTIES OF APPROVED CLERKS 8.1 For the purposes of an audit under these Rules an approved clerk shall: (a) produce for inspection by the auditor any accounting or other records relating to the approved clerk's business; and (b) give the auditor any other information he or she reasonably requires Except where a statutory declaration under Rule 8.3 has been lodged or an audit under Rule 8.6 carried out, an approved clerk shall lodge with the Bar Council a report of the audit of the approved clerk's trust account for the audit year ending on the previous 31 October. If an approved clerk that is authorised to receive trust money does not hold any trust money in an audit year, the approved clerk shall lodge with the Bar Council or the Board a statutory declaration in or to the effect of Form 3 by 30 November following that audit year. A report under Rule 8.2 shall be in or to the effect of Form 2, setting out in detail, as at that audit date: (a) the total of all trust money held by the approved clerk, including any amount on deposit with the Board under Rule 4; (b) the names of any trust bank accounts into which that trust money was lodged, the balance of those bank accounts and, where the bank balances were not in agreement with the approved clerk's cash book balance, a statement reconciling those balances; (c) the names of all persons on whose behalf the approved clerk was holding money in a trust bank account and the amount to the credit of each such person; and (d) a list showing in respect of each ledger account balance which has remained unchanged during the preceding period of 12 months, the date of the last transaction and the reasons why no change has taken place. The Victorian Bar Inc. Victorian Bar Incorporated- Clerks' (Audit and Trust Money) Practice Rules Page 13

14 Within 14 days after the opening of any new trust bank account an approved clerk shall notify the approved clerk's auditor and the Bar Council of the name and number of the account, the bank and branch at which the account is held and the date on which the account was opened. An approved clerk that ceases to be authorised to receive trust money shall have the trust records audited by an approved auditor in respect of : (a) the period from the end of the preceding audit year until the date of ceasing to be so authorised; (b) each completed period of 12 months thereafter during which the approved clerk continues to hold trust money; and (c) the period from the end of the last period referred to in paragraph (b) until the date on which they cease to hold trust money An audit carried out in accordance with Rule 8.6 shall comply with the Act and these Rules. An approved clerk shall lodge with the Bar Council: (a) a report of each audit under Rule 8.6 within 60 days after the end of the period to which the audit relates; and (b) a statutory declaration in the prescribed form within 60 days after ceasing to hold trust money. 8.9 If an approved clerk dies, their personal representative must comply with Rules 8.6 and 8.8 as if the personal representative were the approved clerk. 9. TRUST ACCOUNT DEFICIENCIES 9.1 An approved clerk shall not, without reasonable excuse: (a) have a deficiency in his or her trust account; or (b) fail to account for any trust money or security received from a client An approved clerk shall notify the approved clerk's auditor upon a loss or deficiency occurring in the trust account. An approved clerk who believes on reasonable grounds that there is a deficiency in the trust account of another approved clerk shall report it to the Board as soon as practicable after forming the belief. An approved clerk shall not refuse to comply with Rule 9.3: (a) on the ground of any duty of confidence; or (b) on the ground that making the report may tend to incriminate the approved clerk. 9.5 An approved clerk is not personally liable to any action for any loss or damage suffered by another person as a result of the approved clerk making a report in accordance with Rule 9.3. The Victorian Bar Inc. Victorian Bar Incorporated- Clerks' (Audit and Trust Money) Practice Rules Page 14

15 10. INVESTIGATION BY INSPECTOR 10.1 The Bar Council may appoint a person: (a) who is an approved auditor; or (b) who (i) in the opinion of the Bar Council is an appropriate person to conduct an investigation under this Division; and (ii) meets the requirements of the rules (if any) made by the Board under section 199, to investigate the trust account of an approved clerk The Board may appoint a person: (a) who is an approved auditor; or (b) who (i) in the opinion of the Board is an appropriate person to conduct an investigation under this Division; and (ii) meets the requirements of the rules (if any) made by the Board under section 199, to investigate the trust account of an approved clerk The Legal Ombudsman may appoint a person: (a) who is an approved auditor; or (b) who (i) in the opinion of the Legal Ombudsman is an appropriate person to conduct an investigation under this Division; and (ii) meets the requirements of the rules (if any) made by the Board under section 199, to investigate the trust account of an approved clerk For the purposes of an investigation under Rules 10.1, 10.2 or 10.3 an approved clerk shall: (a) produce for investigation or copying by the inspector any accounting or other records relating to the business of the approved clerk; and (b) give the inspector any other information he or she reasonably requires An approved clerk may not refuse to comply with Rule 10.4: (a) on the ground of legal professional privilege or any other duty of confidence; or (b) on the ground that production of the record or giving of the information may tend to incriminate the approved clerk. The Victorian Bar Inc. Victorian Bar Incorporated- Clerks' (Audit and Trust Money) Practice Rules Page 15

16 10.6 If an approved clerk before producing a record or giving information in accordance with Rule 8.1 objects to the inspector on the ground that the production of the record or giving of the information may tend to incriminate them, the record is inadmissible in evidence in any proceeding against the approved clerk for an offence, other than: (a) an offence in relation to the keeping of trust accounts for the receipt of trust money; or (b) an offence in relation to the giving of false or misleading information. Author: The Victorian Bar Council Date of Publication: 28 November 2003 Published by: The Victorian Bar Incorporated The Victorian Bar Inc. Victorian Bar Incorporated- Clerks' (Audit and Trust Money) Practice Rules Page 16

17 Form 1 Auditor s Report I, [..] of [..] hereby certify:- 1. That this auditor s report is signed in respect of the following approved clerk: [...] (list full name of approved clerk covered by the report) carrying on business at the following address: [...] (list the address at which the approved clerk carries on business) under the following name: [..] (list any name under which the approved clerk carries on business) That I am an approved auditor within the meaning of Section 3 of the Legal Practice Act 1996 (the Act). That in accordance with the Act and any direction issued under section 186(1) of the Act, I have made an audit of the trust account of the approved clerk for the period of twelve months ending on 31 October 2[..]. That I do not, and have not during the period covered by this report, carried out any work for or on behalf of the approved clerk other than work allowed under Rule 6.3 of the Clerks (Audit and Trust Money) Practice Rules (the Rules). That I am not disqualified from auditing the trust account of the approved clerk under Rule 6.4 of the Rules. That in carrying out the audit I have: (a) (b) ascertained that a trust bank account (or trust bank accounts) was/were/not kept by the approved clerk during the period covered by the audit; made a test examination of the trust bank account(s) and statements relating to the trust bank account(s) of the approved clerk during the period covered by the audit; (c) made a comparison - (i) (ii) as at the [... ] 2[..] on which day (or within one month thereafter) I visited the offices of the approved clerk without previous notice, and at the same time, examined the approved clerk s trust account; and as at the 31 October 2[..], being the last day of the period of audit, between the liabilities of the approved clerk to the clients of the legal practitioners on account of who the trust money was received and to other persons in connection with the legal practitioner s practice as shown by the approved clerk s trust account and the balance standing to the credit of the trust bank account of the approved clerk. The Victorian Bar Inc. Victorian Bar Incorporated - Clerks' (Audit and Trust Money) Practice Rules

18 7. 8. That the approved clerk supplied me with all such information and explanations as were required by me to enable me to carry out the audit. That there was not so far as shown by the audit at any time during the period of the audit any deficiency in the trust account of the approved clerk or That there was on [... ] 2[..] a deficiency of $[.] in the approved clerk s trust account and that the amount of deficiency was restored on [... ] 2[..]. Such deficiency arose in the following circumstances: That so far as shown by the audit the trust account of the approved clerk has/has not been regularly kept and properly written up and in my opinion the accounting systems and records maintained by the approved clerk are/are not adequate having regard to the nature of the business. That as at the dates of my examination the approved clerk had sufficient funds on deposit with the Board in accordance with the requirements of the Act. That having made such checks and examined such files representative of every part of the approved clerk s trust account as I considered reasonable, I am of the opinion that the approved clerk has, during the period of the audit, complied with the requirements of the Act and of the Rules. I desire to bring to the notice of the Bar Council the following additional matters: (Here set out such additional matters as the auditor considers should be brought to the notice of the Bar Council.) Dated [... ] 2[..] (Signed)... Author: The Victorian Bar Council Date of Publication: 28 November 2003 Published by: The Victorian Bar Incorporated The Victorian Bar Inc. Victorian Bar Incorporated - Clerks' (Audit and Trust Money) Practice Rules

19 Form 2 Statement of Trust Moneys Report by approved clerk under Rule 8.2 of the Clerks (Audit and Trust Money) Practice Rules, and certificate by approved auditor under Rule 7.6(b) of those Rules The total of all trust moneys held by [..] (name of approved clerk) on 31 October 2[..] was Total (e) $[.] Details of those moneys are: - Deposited with the Legal Practice Board $[.] - deposited with (a) [..] - as per bank statement $[.] - less unpresented cheques (b) $[.] - add moneys not deposited (c) $[.] - Other adjustments (d) $[.] - Total (e) $[.] 3. The names of all persons on whose behalf those moneys were held and the amount to the credit of each person were: - Total (e) $[.] 4. Trust ledger balances which have remained unchanged during the preceding period of twelve months ending on 31 October 2[..] were: (include names, balances, date of last transaction and the reason why no change has taken place.) 5. (a) During the current audit year or the preceding audit year (excluding any separate trust account kept on the instructions of another person for the exclusive use of the other person) (i) the lowest balance in the trust bank account at the end of a day as disclosed by the bank statements of the approved clerk and (ii) the amount on that day held on deposit with the Legal Practice Board was: Lowest daily balance in the trust bank account Amount on that day held on deposit with the Legal Practice Board $[.] $[.] Total $[.] and The Victorian Bar Inc. Victorian Bar Incorporated - Clerks' (Audit and Trust Money) Practice Rules

20 (b) Any adjustment required to be made to the amount held on deposit with the Legal Practice Board has been made prior to the signing of this statement and the amount now standing on deposit with the Legal Practice Board is $[.] I, [..] of [..] being an approved clerk under the Clerks (Audit and Trust Money) Practice Rules, report that the above statement is true and correct in every particular and relates to all trust moneys held by me on 31 October 2[..] and is a report of the audit of my trust account for the audit year ending 31 October 2[..] Dated [... ] 2[..] (Signed)... I, [..] of [..] being the approved auditor within the meaning of Section 3 of the Legal Practice Act 1996 appointed under section 183 of the Legal Practice Act 1996, certify that so far as disclosed by my audit of the trust account, the above statement correctly presents the information required to be shown under Rule 8.4 of the Clerks (Audit and Trust Money) Practice Rules. Dated [... ] 2[..] (Signed)... Explanatory Notes to Form 2 - trust bank account means the account(s) held by an approved clerk with a bank or authorised society maintained by the approved clerk for the holding of trust money. - bank includes authorised society. (a) (b) (c) (d) (e) Name of bank, branch of bank and account number. Repeat as necessary. Detail on separate page if necessary. Particulars required - date, name of payee, serial number and amount of cheque. Details including date received and date banked. Details. Total of paragraphs 1, 2 and 3 to agree. Author: The Victorian Bar Council Date of Publication: 28 November 2003 Published by: The Victorian Bar Incorporated The Victorian Bar Inc. Victorian Bar Incorporated - Clerks' (Audit and Trust Money) Practice Rules

21 Form 3 - Statutory Declaration by an approved clerk who did not hold trust moneys during the audit year I,...of... barristers clerk being an approved clerk under the Clerks (Audit and Trust Money) Practice Rules (the Rules) do solemnly and sincerely declare that at the commencement of the period of twelve months which ended on 31 October 2[..] I did not hold any trust money within the meaning of the Legal Practice Act 1996 and the Rules and I did not during the course of that period receive any such money. I solemnly and sincerely declare this declaration is signed with my name and handwriting and that the contents of this declaration are true and correct in every particular. Declared at...this... day of Before me... (Signed)... Justice of the Peace A Commissioner for Affidavits A Legal Practitioner holding a current Practising Certificate under the Legal Practice Act * Omit words not applicable Author: The Victorian Bar Council Date of Publication: 28 November 2003 Published by: The Victorian Bar Incorporated The Victorian Bar Inc. Victorian Bar Incorporated - Clerks' (Audit and Trust Money) Practice Rules