If your legal practice involves temporarily withholding or safekeeping clients’ money in a trust account for any length of time, your trust records must be externally examined once that financial year. This is a legislative requirement under the Legal Professional Uniform Law and the Legal Professional Uniform General Rules 2015. According to The Law Society of Australia, this requirement excludes Transit Money. However, it is best to consult a qualified external examiner for clarification on specific compliance.
Not all ‘qualified accountants’ are ‘qualified external examiners’. In Australia, accountants become ‘qualified’ after they registered with one of the three nationally recognised professional accounting bodies: The Chartered Accountants Australia and New Zealand (CAANZ), the Certified Practising Accountants (CPA) Australia or the Institute of Public Accountants. Qualified accountants in these professional bodies can become qualified external examiners after they satisfy the following requirements in accordance with Rule 65 of the Legal Profession Uniform General Rules 2015 (sourced from the Law Society website):
- members of CPA Australia holding a current Public Practice Certificate issued by that body;
- members of Chartered Accountants Australia and New Zealand holding a current Certificate of Public Practice issued by that body;
- members of the Institute of Public Accountants holding a current Professional Practice Certificate issued by that body;
- persons registered as auditors under Part 9.2 of the Corporations Act;
- employees or agents of the designated local regulatory authority; and
- have succ¬essfully completed a course of education approved by the Legal Services Council.
After you decided on your external examiner, you ¬¬need to notify the Trust Accounts Department by providing them with a completed Notification of appointment or cessation of external examiner form. This form is found on the Law Society website. Once your appointed external examiner has completed a written External Examiner’s Report on your trust records, it will be forwarded to the Law Society on or before 15 May each year.
C Advisory is a qualified external examiner and can assist law firms in auditing their trust accounts. Contact us today to satisfy your legal trust account compliance promptly and in a hassle-free way!