NSW Lawyer’s Trust Account Audits
Under the Legal Profession Act 2004 and Legal Profession Regulation 2005 legal firms are required to have their trust accounts examined by an approved auditor annually and submit an “External Examiner’s Report” to the Law Society of New South Wales.
The Law Society requests that the External Examiners Report be lodged by 29 May to ensure processing and any matters arising may be addressed within the financial year.
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There are two possible reasons why you would not need to file an audit report:
- You are not required to file an External Examiners Report to the Law Society if your firm has never operated a trust account. However, it is rare that a law firm would not operate a trust account as it is generally accepted practice that funds are collected from the client in advance. These funds have to be held in a trust account. A firm would not keep a trust account in a situation where they only bill for the work after it is done and receive payments for these invoices.
- If the only trust money received or held by a law practice during a financial year is transit money, the practice’s trust records in respect of that year are not required to be externally examined. Under the Legal Profession Act 2004 “transit money” is defined as
“money received by a law practice subject to instructions to pay or deliver it to a third party, other than an associate of the practice;”
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The External Examiner’s Report may only be prepared by a registered company auditor appointed under Section 1280 of the Corporations Act 2001.
Michael Quinn is a registered company auditor (registered by ASIC) and this allows Quinns to assist law firms in ensuring their trust accounts meet The Law Society’s regulations and undertake the audit, making the reporting process a simple step.
The law firm has an obligation to notify the Law Society in writing of the appointment of an External Examiner. The letter should include the name, business address and contact number of the External Examiner.
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The External Examiner is required by the Legal Profession Act 2004 to provide the law firm with a report that states whether it has complied with the Act and the regulations.
The Quinn Group has a specialist auditing division with the experience and qualifications required to conduct and issue such Audit Reports and can assist you preparing for your reporting obligations. For more information <click here> to complete our online enquiry form and a consultant will contact you on the next business day.
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After submitting an “External Examiner’s Report” to the Law Society of New South Wales you should keep a copy for your records in a safe place.
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