Under the Legal Profession Uniform Law (NSW) and the Legal Profession Uniform General Rules 2015, law practices are required to have their trust accounts examined by an External Examiner each year. The external examination year for trust accounts is from 1st April to 31st March.

Do you have trust money?

Trust money is money that is entrusted to a Law Practice in the course of, or in connection with, the provision of legal services. If you are in receipt of trust money, an external examination of your trust account records is required.

What is the purpose of an external examination?

The purpose of an external examination is to review the operation of the trust account and:

  • confirm that the law practice has complied with the legislative requirements; and
  • determine whether or not internal controls relating to the trust records are satisfactory.

What will the external examination involve?

In order to conduct a thorough examination of a trust account the External Examiner requires access to both the firm’s trust account records as well as a sample of client records. The External Examiner will complete a number of tests to ensure the trust account is operated in accordance with the legislation and all monies are correctly accounted for. Once the external examination has been finalised, the Law Practice is notified of the findings.

As part of the process, three reports are required to be lodged with the Law Society of NSW:

  1. Part A Statement – this is an online form that needs to be completed by the Law Practice by 30th April.
  2. Part B Statement – this is also an online form that needs to be completed by the Law Practice by 31st May.
  3. External Examiner’s Report – after conducting the examination, this report is completed and submitted online by the External Examiner by 31st May.

How can TSP Accountants help?

Whilst the primary focus of the external examination is satisfying the compliance requirements, TSP Accountants also see it as an opportunity to educate and assist Legal Practitioners on all matters relating to the operation of the trust account. This will hopefully reduce the chances of further scrutiny from the Law Society of NSW.

Legal trust accounts can only be audited by External Examiners registered with the Law Society of NSW. At TSP Accountants we have two registered External Examiners available to perform your examination, either at your premises or remotely, if you prefer. Contact us for further information or to discuss your Trust accounts with our team.