Trust Accounting Services

Law firm trust accounting faces some of the most stringent regulatory requirements of any profession. Each Canadian province's law society establishes detailed trust accounting rules that lawyers must follow. Our law firm trust services ensure compliance with Law Society of Ontario rules, Law Society of British Columbia requirements, or other provincial law society standards. We maintain proper client identification and record-keeping, deposit client funds promptly into trust accounts, and disburse only for authorized purposes with proper documentation.

Trust reconciliation represents a critical requirement—law societies typically require monthly three-way reconciliation between client ledgers, trust ledger, and trust bank account statements. Any discrepancies must be identified immediately and investigated. Shortfalls beyond minimal thresholds must be reported to the law society promptly. Our reconciliation processes are thorough and systematic, identifying discrepancies the same month they occur and investigating until resolved.

Law firms must also calculate and remit interest earned on pooled trust accounts. When client funds are pooled in interest-bearing trust accounts, interest must be calculated and allocated to individual client accounts based on daily balances and formulas established by provincial law societies. This pooled interest calculation requires sophisticated tracking and accounting. Our services handle this complexity, calculating interest correctly, allocating it to client accounts, and remitting required portions to law societies or trustee programs. We also manage special trust scenarios including transfers between firms when lawyers change firms or files transfer, handling of unclaimed trust balances, and trust accounting for multi-jurisdiction practices where different provincial rules may apply.

Real estate brokerages hold substantial funds in trust for deposits, down payments, and commissions, creating significant trust accounting responsibilities. Provincial real estate councils establish specific trust account requirements that brokerages must meet. Our real estate trust accounting services ensure compliance with Real Estate Council of British Columbia, Real Estate Council of Ontario, Real Estate Council of Alberta, or other applicable provincial regulatory body requirements.

We maintain separate trust accounts as required for deposits (held on behalf of buyers and sellers) and commissions (held until earned and payable to sales representatives). Deposit trust accounts track funds through real estate transactions from initial deposit through completion, ensuring amounts held match purchase agreement terms and are disbursed properly at closing according to completion statements and lawyer instructions. Commission trust accounts track commissions earned by sales representatives, holding funds until properly withdrawn according to brokerage policies and regulatory requirements.

Our real estate trust services include transaction-level tracking showing each property transaction's trust balance, deposit reconciliation confirming amounts held match contractual obligations, commission calculation and trust accounting, preparation of required regulatory trust reports, and support during real estate council audits or reviews. Brokerages using our services avoid common trust accounting deficiencies that lead to audit findings and disciplinary action. We also help brokerages establish trust accounting policies and procedures that ensure compliance across all brokers and administrative staff, creating consistent practices that protect the brokerage and its clients.

Three-way reconciliation represents the cornerstone of trust accounting compliance, comparing three sets of records that should always agree: individual client ledgers showing each client's trust balance, the trust ledger aggregating all client ledger totals, and the trust bank statement showing actual cash on deposit. Our monthly reconciliation performs this comparison systematically, identifying any discrepancies between the three records.

Discrepancies arise from various sources including bank errors or fees charged in error, recording errors where disbursements or deposits were recorded incorrectly, outstanding checks or electronic transfers that haven't cleared, timing differences between recording and bank processing, or—most critically—unauthorized or improper withdrawals. Every discrepancy requires immediate investigation and resolution. Most regulators require notification of trust shortfalls beyond minimal de minimis thresholds, making prompt discrepancy identification and resolution essential.

Our discrepancy management process traces each difference to its source, reviewing supporting documentation, bank records, client communications, and transaction history. We implement corrective actions to prevent recurrence, which may include process improvements, additional staff training, or enhanced controls. Reconciliation is not just a mathematical exercise—it's a critical control protecting client funds and ensuring regulatory compliance. Our systematic approach ensures discrepancies are caught early, resolved quickly, and documented appropriately for regulatory purposes.

Trust account documentation requirements are extensive, reflecting the fiduciary nature of client funds and the need for complete accountability. Every trust transaction must be supported by appropriate documentation—deposit slips, transfer confirmations, legal bills showing services rendered, client withdrawal instructions, court orders directing payments, settlement agreements, or other authorization documents. Our trust accounting maintains comprehensive documentation files for all transactions, organized for efficient retrieval during audits or regulatory reviews.

We prepare for regulatory audits through pre-audit mock reviews that identify potential issues before regulators discover them, identifying missing documentation, incomplete reconciliations, or other deficiencies. We organize records for efficient auditor access, creating clear audit trails that demonstrate compliance. During audits, we support the process by explaining accounting treatments, providing requested documentation, responding to auditor inquiries, and facilitating efficient review completion.

Our audit support services help law firms and real estate brokerages achieve clean audit results. Regular audits by law societies or real estate councils become routine rather than stressful events when trust accounting is maintained properly. We also help firms respond to regulatory inquiries, address audit findings, and implement corrective actions for any issues identified. Our comprehensive documentation and systematic processes create audit-ready trust accounting that withstands regulatory scrutiny.

When client funds are pooled in interest-bearing trust accounts, interest earned must be calculated and allocated to individual client accounts in accordance with provincial law society or regulatory requirements. This pooled trust interest calculation presents complex accounting challenges, requiring daily tracking of each client's trust balance, application of appropriate interest rates and formulas, and proper allocation and remittance.

Our pooled interest services calculate interest earned on each client's funds based on daily balances, using the formulas and rates specified by applicable provincial regulations. We allocate calculated interest to individual client accounts, maintaining records of interest earned and remitted. We remit required portions of pooled interest to law societies or trustee programs as required, filing necessary documentation and reporting.

Pooled trust interest accounting requires sophisticated systems and meticulous record-keeping. Errors in calculation or allocation can create compliance issues and client complaints. Our services ensure accurate calculation, proper allocation, complete documentation, and timely remittance. We also advise on trust account structuring—whether to use pooled accounts, whether interest-bearing accounts are appropriate given balances and transaction volumes, and how to optimize trust account management while maintaining full compliance.