LSBC Trust Accounting Initiatives
Law Society Initiatives to Assist with Trust Accounting and Ensure Public Protection
In addition to the annual trust report, the Trust Assurance Department also conducts Compliance Audits. All law firms will be subject to a Law Society compliance audit to ensure their books, records and accounts comply with the requirements of the Legal Profession Act, the Law Society Rules and the Code of Professional Conduct for British Columbia.
The Law Society aims to audit each firm at least once every six years. Audits are selected at random unless prompted by an indicator such as: failure to file a trust report, information on a trust report that indicates non-compliance with the trust accounting rules and procedures, referral from other departments of the Law Society, inadequacies that were identified during a previous compliance audit, or a compliance level that raises concerns about the lawyer’s trust accounting practices.
The other benefits of the Trust Assurance Program are:
- Most firms file self reports, no longer needing an outside accountant to review and complete a portion of the Trust Report.
- Earlier detection of firms involved in breach of trust matters will reduce payments under LSBC's Part B (trust protection) insurance coverage.
- The public and lawyers will have greater confidence in the legal profession.
See the January-February 2006 Benchers' Bulletin article "A New Trust Assurance Program—More Effective, and Less Costly for Firms". The Trust Assurance Program will be entirely funded by the Trust Administration Fee.
The LSBC is hiring additional in-house accountants to perform the audits in the six year cycle; a risk rating criteria that utilizes information from the Member Services system and the Self Reporting Trust Report will be used to ensure that the areas of law within the profession that are more risky than others are looked at carefully. Ultimately, the LSBC believes this will be a better method of detecting frauds than relying on outside audits.
See the section on trust assurance on the Law Society website for further information about the Self-Reporting Trust Report.