IOLTA Trust Account Triple Reconciliation

Transcription

1 IOLTA Trust Account Triple Reconciliation

2 IOLTA Trust Account Triple Reconciliation Introduction When we talk to lawyers about their trust accounts, we find that most lawyers understand the rules for operating a trust account, but they do not fully understand the monthly reconciliation report requirements. In fact, most lawyers have never seen an example of a report that meets the reconciliation requirement. In this example of an IOLTA trust account reconciliation, we offer a description of how we prepare IOLTA reconciliations for our clients, as well as a clean example of our IOLTA reconciliation report. There are two documents in this example. You re reading the first document, which provides summary overview and a narrative of the transactions in the example IOLTA reconciliation. The second document is the example of an IOLTA reconciliation report package that we would provide for clients each month, except for the LawFirmVelocity.com URL in the footer. All of the pages included in the example reconciliation are necessary under state bar requirements. The example includes both the supporting documents and reports required each month. The following overview describes the purpose of each page in the example. The final section is a narrative of the transactions included in the example. Overview of the attached IOLTA reconciliation report IOLTA Triple Reconciliation Summary - Page 1 o Starts with the IOLTA account bank statement balance, adjusts for outstanding items, and reports the reconciled bank account balance. The reconciled bank balance must tie to the general ledger and client ledger balances. The three matching numbers provide the triple reconciliation. o We include thirteen months of historical balance on the summary page to provide a context when reviewing the IOLTA reconciliation. When reviewing, the managing partner should compare her expectation of the IOLTA account balance with the thirteen-month trends. Full Trust Account Bank Statement Page 2 & 3 o We enclose the full bank statement, including the blank and spam pages from the bank, so we do not need to explain missing pages to an auditor. Copies of Cleared Checks Page 2 & 3 o The bank statement should include copies of cleared checks. o If the bank statement does not include copies cleared checks, we will archive images from the online banking system. Merchant Account Statement Page 4 o If the firm accepts credit card payments into the IOLTA account, we include a statement that details all activity. Page 2

3 Deposit Detail Report Page 5 o Report is used to detail transactions where multiple items were aggregated into a single deposit. Disbursement Detail Report Page 6 o Report is used to detail transactions were a single disbursement paid multiple items. Reconciliation Detail Page 7 o Report provided after we have balanced the IOLTA account check book. o Report details all deposits and check that have not cleared the bank. IOLTA General Ledger - Page 8 o Report of all IOLTA account activity, sorted by date. IOLTA Client & Admin Legers Page 9 o Report of all IOLTA activity, sorted by client and then by date. o Includes a running total of each client s IOLTA account balance. Narrative of the transactions recorded in the attached IOTLA reconciliation report If you re new to reading trust account reports, the following narrative should help you better understand the transactions included in the example. *The Law Firm, PLLC Admin Ledger The asterisk before the name is only there to keep it at the top of the report when alphabetized. Firm deposited $100 in prior period to cover future bank fees. Advance fee deposit check from Customer C was returned for insufficient funds on Jan 9. Bank fee of $25 incurred. *IOLTA Interest The asterisk before the name is only there to keep it at the top of the report when alphabetized. We record IOLTA account interest deposits and withdrawals for completeness and so that the total deposits and withdrawals on each report tie to the bank statement totals. Client A Provided $4,000 security deposit in prior period. Firm invoices customer monthly, and the client is expected to pay each invoice. Security deposit would be applied to open invoice balance if the client does not pay. If unused, security deposit will be returned to the client when the matter is closed. Client B Provided $5,000 advance fee deposit in prior period. Jan 10, $2,345 of advance fee deposit transferred to firm operating account to pay invoice Invoice delivered to client on January 3 rd. Page 3

4 Client C Jan 6, $2,500 advance fee deposit check deposited to IOLTA account. Jan 9, $2,500 is withdrawn from IOLTA account. Bank returned funds due to insufficient funds. Jan 9, bank charges $25 fee for NSF check. Client D Jan 6 th, $100,000 settlement funds received. Jan 24 th, $35,000 contingency to firm. Jan 24 th $10,000 to expert witness. Check has not cleared on the January 31, 2014 bank statement. Jan 24, $55,000 payment to Client D for balance of judgment. Page 4

5 IOLTA & trust account reconciliations law firm billing, accounting, tax & payroll services practice management system implementation & support controllership & CFO services MARY E. MOORMAN CPA, MBA, MTax PAUL W. CARLSON CPA, MBA