Trust Report & Practice Declaration
Every year, you (Rule 3-79), or your firm on your behalf (Rule 3-54(2)), must make a Trust Report1 filing with the LSBC, whether you have received money in trust during that year or not. The individual Lawyer's Practice Declaration is included as Schedule 2 of the Trust Report and is filed at the same time. The filing is done online.2
The Trust Assurance Department notifies law firms via their annual Trust Report Filing Notice whether they are required to file a Self Report or an Accountant's Report. Law firms are not able to self-report unless they have been selected to do so. The Executive Director of the Law Society has the discretion to require any lawyer to deliver a Trust Report with an Accountant's Report. As well there are some firms who must continue to file an Accountant's Report, chief among them are new firms who have filed less than two Trust Reports with an external accountant's report.3
In most cases, one Trust Report is filed for a law practice and that satisfies the requirements of all its lawyers (both partners and associates). However, for the Trust Report filing to be accepted by the LSBC, all the lawyers in the practice must also have individually filed online their individual Lawyer's Practice Declaration.
If you contract your services to one or more law firms, the Trust Report filing by the firm(s) may not be sufficient for you. If you are uncertain about this or any other aspect of the Trust Report filing, contact the Trust Assurance Department at firstname.lastname@example.org.
You must file the Trust Report with the LSBC within three months of the end of your reporting period (Rule 3-79(3)). For example, if your period ends January 31, you must file by April 30.
When starting a new practice, you may choose your trust reporting period. It does not need to coincide with your year-end for tax purposes. In most cases, if you do not choose another reporting period, the period will coincide with the date of registering your firm with the LSBC. The last reporting period ends on the day your firm ceases to practise, and you must make a final filing within three months of winding up. This final trust report filing must be in the form of an Accountant’s Report.
If you are late filing, the penalty is $200 for the first 30 days. After that, it is $400 for every month or part month. If you don't file within 60 days, you may be suspended until the Trust Report is delivered (Rule 3-80.1(3)).
Whether you file a Self Report or Accountant's Report, Sections A and B are the same. Section C is the only difference between the two Trust Reports. The Trust Report is set up as follows:
Section A Description of Practice
- Completed by you or your firm, whether or not your firm had trust accounts during the year;
- Among other things, if during the year you used another firm's trust account (which can be appropriate, usually due to the infrequency of trust transactions), you must disclose this information, as well as any funds you received as client loans, or any trust or general cheques returned NSF.
Section B Financial Profile
- Completed by you or your firm, if the firm held or handled (received or withdrew) any trust funds.
Section C Summary of Accountant's Specified Procedures (Accountant’s Report)
- The accountant must be either a certified general accountant or a chartered accountant licensed for public practice in B.C. (Rule 3-75), and must be independent from and not in a conflict of interest with your firm;
- The accountant must confirm that specific tests as outlined in the Trust Report have been performed, and must report any exceptions found to the Rules4 or any mistakes found in Sections A and B; and
- The accountant also must report on the balance of your trust assets and liabilities at the end of your reporting period, which confirms you have sufficient funds to meet all your trust obligations.
Section C Accounting Procedures (Self Report)
- A set of accounting related questions completed by you or your firm. An external accountant is not required.
Section D Lawyer's Declaration
- Completed by you or your firm, confirming that all books and records have been provided to the accountant.
Schedule 2 Lawyer's Practice Declaration
Completed by each lawyer in the firm. The Trust Report is one of the tools the LSBC uses to carry out its statutory obligation to protect the public by ensuring that:
- your practice has an adequate system for recording financial transactions; and
- your system is working properly.
1 The Trust Report was phased in during 2005 and is a replacement for the Accountant's Report (Form 47) and Statutory Declaration (Form 48), which were used up until 2004.
2 See the section on trust assurance on the Law Society website for further information about the Trust Report, including links to Trust Report Filing Instructions and a sample copy of the Trust Report.
3 For more information on the Self-Reporting Trust Report see Instructions Self-Report. For a sample of the Self-Reporting Trust Report see Sample Self-Report.
4 See Appendix A for a list of some of the common exceptions reported.