Legal Profession Act requirements for solicitors' trust accounts - Aus

1

I believe that this brilliant product could satisfy the requirements for trust accounting by solicitors in Aus.

Partly because those requirements are really pretty elementary.

For Queensland, as to computerisation of trust accounting, you must meet the following not terribly challenging requirements:

(1) The law practice must ensure its computerised accounting
system is not capable of accepting, in relation to a trust ledger
account, the entry of a transaction resulting in a debit balance
to the account, unless a contemporaneous record of the
transaction is made in a way that enables the production in a
permanent form, on demand, of a separate chronological
report of all occurrences of that kind.
(2) The law practice must ensure the system is not capable of
deleting a trust ledger account unless—
(a) the balance of the account is zero and all outstanding
cheques have been presented; and
(b) when the account is deleted, a copy of the account is
kept in a permanent form.
(3) The law practice must ensure any entry in a record produced
in a permanent form appears in chronological sequence.
(4) The law practice must ensure each page of each printed record
is numbered sequentially or is printed in a way that no page
can be extracted.
(5) The law practice must ensure its computerised accounting
system is not capable of amending the particulars of a
transaction already recorded otherwise than by a transaction
separately recorded that makes the amendment.
(6) The law practice must ensure its computerised accounting
system requires input in every field of a data entry screen
intended to receive information required by this division to be
included in trust records.

2

Do you have a question?

3

Hello @Kevin_Johnson

Account can be deleted in manager if user has permission for that.

If account is deleted its data is also deleted.
You can kept a copy outside manager for that.

This can be done by way of designing user permissions i.e., User not given access to delete record.

Not possible in manager
As there is no mandatory field feature available in manager.

4

Hmm. Thank you very much, Omnipotent, for taking the trouble to make these observations. It is very much appreciated, indeed. I may have been overrating the possibility of Manager meeting the requirements of the legislation for solicitors’ trust accounts. It’s a pity. I will ponder your observations closely.

5

These are the Ques for which @Kevin_Johnson want the ans @Joe91. Is these can be performed in manager or not

6

I’ve set up my trust ledger accounts under a control account ‘Client’s trust money’. I have receipts of money entered to a particular client’s trust ledger account.

If I try to delete the trust ledger acct for a particular client with a credit balance, I get the message from Manager: ’ The form cannot be deleted because it is referenced in the following transactions [references to receipts]'.

This is good; this seems to me to be an inherent block on deleting the ledger account, for the purposes of requirement (a)…

7

But if Receipt is deleted first then there is no block on that.

Yes You Use Manager for trust Accounting but it does not meet Nesaccery req(as stated by you) for This type of Accounting.

8

I see – yes – you are right, the receipt can be freely deleted first. I think requirement (2)(a) may be satisfied on a literal interpretation of it (arguably) but given that receipts are readily deleted it cannot really be accepted that the system satisfies this requirement.

9

Correct this is what i want to say.

10

Thank you for your insights. I should add that I am not actually using Manager at this time for a legal practice. I work for a practice which uses actionstep for practice management generally including trust accounts. It is very good, but, I think, rather expensive. I am thinking of setting up my own practice on my own account with very limited outlays and capital and have wondered whether Manager would be feasible. Unfortunately, I think, not quite.

11

Records can always be deleted by someone knowledgeable on a computer system they control.

On a third party computer system, user controls can be put in place to limit what users can do but not the host administrator.

With a local computer system you can run backup system which takes incremental backups. The entire backup could be deleted by the administrator but not particular records from the backup. Added an automated backup ensures the entries can not be deleted. A backup system is required in practice anyhow so is of zero incremental cost.

Managers history facility almost achieves the same thing except the undo from the history removes the transaction rather than adding a deleting record.

12

No computerised accounting system can do what you are looking for - there is always a user with full adminstrative control who can delete or amend information stored in the system

13

These are interesting observations. I think it is quite possible that whoever came up with the requirements which appear in the Legal Profession Acts in Australia quite possibly had very little knowledge of computing and that the policy-making and legislative processes, for some reason, did not pick up or reveal that the well-intentioned safeguards are actually just wishful-thinking…

14

Trust accounts regulation in Australia, the UK and USA has quite a long history and in some respects is quite detailed, for example, in the way in which cash receipts and cash payments books are to be kept, and concerning reconciling these with trust account ledger accounts and bank statements at end of month. But the detail in the regulations so to speak comes from the inputs of accounts concerned only with accounting standards strictly or narrowly defined, and to some extent from lawyers so far as the general law of trusts is concerned. At least in Aus, I suspect there has not been much input from practitioners knowledgeable about computer security standards or techniques to make computerised accounting records less vulnerable to false entries – inadvertent or deliberate.

15

You do not need a lot of computer knowledge to realise that all records can be manipulated and deleted - putting in safegaurds can minimise the risk but not eliminate altogether.

I suspect whoever drafted the laws had little or no experience of computer systems

16

I have been working hard at my model entries for aggregation of amounts transferable (but yet to be transferred) from trust bank account to office or operating account, giving credit to customer upon allocation of an amount to the office adjustment trust ledger account, with transfers every few working days or whenever convenient of amounts from trust bank account to office (operating) bank account.

(I’m probably not explaining this too well!)

I work on the following plan:

The general set up for the trust account is:

Dr Trust Bank Account [asset]

Cr Clients’ trust money – general (special acct with subsidiary individual trust ledger accounts) [liability – although holding money in trust for someone is not quite, legally, a simply liability or payable, in solicitors’ and lawyers’ trust account arrangements practically everywhere, it is treated as if it simply is a sum payable]

(The significance of a ‘general’ bank account for the trust money held for several clients – or hundreds of clients – is the the lawyer-trustee is ‘mixing’ in the one bank account the trust mone of all clients together, which trust accounts legislation enables the lawyer-trustee to do, and which the law of trusts otherwise would not permit. The law of trusts otherwise would really seem to require a separate bank account for each client or each trust. Mixing of the trust money of all clients in one account is very convenient for small amounts intended mainly to be security for the lawyers fees, or for larger amounts to be dealt with within a few working days, such that separate income-producing investment is not called for – say the purchase money requirement for the completion or settlement of the purchase of a property scheduled for a few days after receipt of the trust money from the client.)

For aggregating amounts transferable from the trust bank account to the office account for debtor invoices issued to clients …

Dr Mr ABC (client) – trust ledger acct

Cr Office Adjustment – trust ledger acct

Dr Office Adjustment Notional Bank Account (which facilitates issuing of receipts) (but which is not a real bank account)

Cr Mr ABC (client) – accounts receivable / debtor invoices

And on transfer, say, every few working days of balance of Office Adjustment – trust ledger account, from Trust Bank Account to Office (Operating) Bank Account…

Dr Office Bank Account

Cr Trust Bank Account

Dr Clients’ trust money – liability account (the credit for the total in the trust bank account the balance of which is the sum of the balances of the individual clients CR trust ledger accounts

Cr – Office Adjustment Notional Bank Account (by payment made to [say] Mr Write Off)