From Reconciliation and Beyond!

Transcription

1 From Reconciliation and Beyond!

2 Risk Management Who are we and what do we do?

3 Quality Assurance Reviews What happens prior to the review? We will schedule a time to visit you at your location We will ask for your most current bank reconciliations We will provide you a list of the files and items we would like to review when we arrive

4 Quality Assurance Reviews What will happen at the review: We will review your trust account reconciliations for completeness, accuracy and compliance We will review requested closing files for completeness, accuracy and compliance You will have the opportunity to ask questions and gain information regarding trust accounting and closing file compliance

5 Trust Accounting Rules & Regulations Who Makes the Rules? The Florida Bar (Rules and 5-1.2) The Florida Legislature (Sec (8) F.S.) See 44 Fund Concept 57 (July 2012) The Department of Financial Services for the State of Florida (Florida Administrative Code ) Federal government (RESPA) The Underwriter Are They Enforced?

6 Trust Accounting Rules & Regulations Absolutely!

7 Collected Fund Rules What are the Rules? Funds may only be disbursed that have been received as collected funds. Collected funds being Certified/Cashiers checks Funds received by wire Money orders, Bank Checks, Official Checks Funds from the trust account of an attorney licensed to practice in the State of Florida Check or draft for loan proceeds issued by a federal or state chartered bank, savings bank or credit union

8 Collected Fund Rules More Rules? Personal checks are not cleared funds until they have actually cleared your account. (Can take up to 10 days or longer) Attorneys may accept personal checks only up to the amount they are willing to reimburse immediately from their own funds should the funds not be available when presented. Title companies may only accept uncollected funds up to $ to fund a closing file.

9 Trust Account Reports Trust Account Reports Reconciliations must contain: Complete Original Bank Statement (not online) Summary of Account showing a 3-way account balance Outstanding checks list including check number, date written and payee Outstanding deposits list including date funds were received and from whom Cleared Deposits and Checks lists Monthly check register Trial balance (list of all files that contain a positive or negative balance totaling the amount of your adjusted bank statement balance and check register balance)

10 Trust Account Review Trust Account Reconciliation Review Monthly review of your trust account reconciliations will help catch errors timely, as well as help save you from future losses and possible claims. Reviews will also deter possible theft and unauthorized use of trust funds. Setting up bank account alerts such as positive pay will assist in transactions needing immediate review.

11 Trust Account Review Trust Account Reconciliation Review What to review: Are you in balance - does your adjusted ending bank statement balance,* check book balance and trial balance all show the same amount? Review your outstanding deposits list - you should never have outstanding deposits more than two days old and then only at the end of the statement month. Research and fund any that are older than two days immediately. *Adjusted ending bank statement balance is your ending bank statement balance plus your outstanding deposits minus your outstanding checks.

12 Trust Account Review Trust Account Reconciliation Review Review outstanding checks list for checks older than 30 days payable to: Lenders (Payoffs) Clerk of Court Tax Collector Underwriters Hazard, Wind & Flood Insurance, Condominium or Homeowners Associations fees To avoid possible claims or losses in the future.

13 Trust Account Review Trust Account Reconciliation Review Review cleared checks lists for any payees that would be suspicious or checks issued to pay personal expenses such as credit cards, mortgage payments, car payments, etc. Review Trial Balance for files that have a negative balance as these also must be researched and funded immediately.

14 Trust Account Review Recap Reconcile and review monthly. Review and clear outstanding checks list monthly. Review trial balance monthly and clear any stale or negative balances to avoid escheatment Review cleared checks list and outgoing wires for misuse of funds Be sure you have a three-way balance. Remember that your adjusted bank statement balance, check register balance and your trial balance should agree each month. Retain bank statements, reconciliations and supporting documentation for six years.

15 Safe Closing Practices Record your documents immediately after closing. Follow your lender s closing instructions. Don t hide information from the lender. Close in compliance with the sales contract. Be sure the lender has a complete copy of the sales contract prior to closing. Never disburse money to third party payees who are not a part of the transaction. Wire funds only when you feel comfortable about the circumstances surrounding the wire.

16 Safe Closing Practices Always have copies of proper ID in your file and never hesitate to ask for additional ID. Never use a signature stamp for checks or policies. Always update the title the day of or the day before closing. Never keep recording overages always return them to the party who paid.

17 Ten Best Practices Trust Account Reconcile your Trust/Escrow account monthly to ensure compliance with the Florida Administrative Code. Have a second person review the Trust/Escrow account after completed. Have a segregation of duties to provide controls over disbursements. Perform a 3-Way Reconciliation of all Trust/Escrow accounts and ensure all amounts match. Reconcile all Trust/Escrow accounts monthly to keep current.

18 Ten Best Practices Trust Account Review the outstanding checks list monthly to ensure checks are clearing timely. Blank escrow checks must be maintained in a locked drawer or safe. Based upon our interpretation of RESPA regulations and Florida Law, refund any excess of funds collected. Funds must be disbursed as stated on the signed HUD-1 Settlement Statement. If charging more then the minimum promulgated rate for simultaneous policy issuances, it must be disclosed on the HUD1.

19 Accounting Programs DoubleTime Required Reports Summary Report, Trial Balance Report, Outstanding Deposit and Disbursement Report, Cleared Deposit and Disbursement Report and Monthly Check register DoubleTime requires no extra set-up to complete the above reports.

20 Accounting Programs Quicken Required Reports Reconciliation Summary, Un-cleared Deposit and Disbursement Report, Cleared Deposit and Disbursement Report, Trial Balance (Income/Expense) and Monthly Check register QuickBooks Required Reports Reconciliation Summary and Detail Report, Trial balance (Custom Summary Report) and Monthly Check register Quicken/QuickBooks requires an extra set-up to complete the above reports.

21 Accounting Programs TAS Required Reports Summary Reconciliation Report, TAS Detail Reconciliation Report (Outstanding detail), TAS Trust Account List (Trial Balance) and Monthly Check register Juris Required Reports Bank Reconciliation, Check Register (Outstanding checks detail), Deposit Register (Outstanding deposits detail), Trust Account Ledger History (Trial Balance) and Monthly Check register Landtech Required Reports Escrow Account register Balance report, Uncleared checks/wires, Uncleared Incoming deposits/wires, Condensed Escrow Report by file (Trial Balance) and Monthly Check register

22 DT - Reconciliation Summary Report

23 DT-Outstanding Deposits Report

24 DT-Outstanding Disbursements Report

25 DT-Bank Register Report

26 DT-Trial Balance Report

27 Tales of Horror from the Auditors

28 Tales of Horror from the Auditors Fraud from Cashier s Checks Check overpayment scam Fraud with a Smart Phone

29 Questions