An audit of a solicitor’s trust account can be a stressful process, but it’s also an opportunity to fine-tune financial practices. If issues are identified, the next step is to implement corrective actions and ensure ongoing compliance. Fixing mistakes is one thing—preventing them from happening again is where real success lies.
So, how can solicitors in NSW ensure their trust accounts remain in order after an audit? Here’s a step-by-step guide to making improvements that last.
Review the Auditor’s Findings
The first step is understanding exactly what went wrong. Whether it’s minor bookkeeping errors or serious compliance breaches, auditors provide detailed reports that outline areas for improvement.
Read through the findings carefully. If something isn’t clear, don’t hesitate to ask questions. Knowing the root cause of an issue will help in designing the right solution.
Fix Immediate Issues
Some problems require urgent attention. If funds were misallocated, they need to be corrected. If records are missing, they need to be located or re-created. If accounts aren’t reconciled properly, now is the time to get them in order.
Make sure all corrections are well-documented. This creates a paper trail that shows proactive steps have been taken to resolve issues.
Improve Internal Processes
Many audit issues stem from weak internal controls. Strengthening these processes is key to preventing repeated mistakes. This could mean:
- Assigning trust account responsibilities to specific staff members.
- Using accounting software designed for trust accounts.
- Conducting regular internal reviews before the next audit.
Clear policies on how trust money should be handled will go a long way in maintaining compliance.
Train Staff on Compliance
Trust account rules are strict, and everyone handling client funds should understand them. If an audit uncovers gaps in knowledge, it’s a sign that training is needed.
Regular training sessions can help prevent accidental breaches. Whether it’s refresher courses or professional workshops, keeping staff informed is one of the best ways to stay compliant.
Set Up Regular Reconciliations
Reconciliation isn’t something that should only happen when an audit is due. Checking accounts monthly (or even weekly) helps catch errors early and keeps everything in order.
For busy firms, working with a solicitors trust accountant can make a big difference. An expert can assist with ongoing compliance, reducing the risk of future audit issues.
Keep Accurate and Up-to-Date Records
Sloppy record-keeping is one of the biggest reasons trust accounts fail audits. Every deposit, withdrawal, and transaction must be properly recorded. Keeping digital records backed up in secure locations ensures nothing gets lost.
Using cloud-based trust accounting software can simplify record-keeping. It also provides easy access to reports, which makes audits smoother.
Conduct Internal Audits
Waiting until the next official audit to check for errors is a risky move. Instead, solicitors should conduct internal audits throughout the year. This helps identify small issues before they become major problems.
Internal audits don’t have to be complicated. A simple checklist covering reconciliations, transaction documentation, and compliance with trust account rules can help keep everything on track.
Final Thoughts
Passing a trust account audit isn’t just about fixing issues when they arise. Ongoing compliance requires strong internal controls, regular reviews, and a commitment to proper record-keeping.
By addressing weaknesses, improving processes, and seeking professional help when needed, solicitors can ensure their trust accounts remain compliant and audit-ready year-round.