Trust account rules vary from state to state, but
one constant for attorneys or anyone working in a fiduciary capacity is
the over-riding fear of running afoul of strict requirements. Take the
following steps and you won’t lose sleep worrying about your
responsibility to comply with complicated trust account regulations.
1. Migrate from Manual to Automated Record Keeping
Review your firm’s trust bookkeeping procedures and identify which
procedures are managed manually. Often, law firms enter each client’s
transactions separately and issue trust checks manually. Manual
bookkeeping is the root of several problem areas. Not only are manual
processes time-consuming, but also mistakes are difficult to detect and
reports are next to impossible to prepare.
A good trust accounting software program can easily replace ALL your
manual bookkeeping tasks and provide you with total control of your
trust accounting. You will:
• Simplify transaction entries, trust check printing, bank
reconciliations, and generating reports
• Readily detect errors
• Maintain an audit trail for any changes made in your trust books
• Make it easy for your accountant to review your trust data and make
appropriate corrections without shuffling through stacks of paper
2. Choose Your Trust Accounting Program Wisely
Don’t rush to embrace the first accounting program you find to manage
your trust books. Many accounting packages that work very well for
general operating accounts often lack features that trust accounting
requires. For example, general accounting packages typically do not
produce client ledgers easily and do not prevent trust accounting
mistakes from occurring. There is typically no audit trail log and one
can even go back to reconciled months and edit prior transactions.
That's not proper trust accounting! When you evaluate your trust
program choices, consider the following questions:
• Does the program make deposits and disbursements in each client
account very easy to enter, track and reconcile?
• Is the program designed to prevent common trust accounting errors,
such as duplicate check numbers, client ledger overdrafts etc.? These
are examples of problems that must be stopped at the transaction entry
itself.
• Are required monthly reports such as ledger card balances,
transactions, reconciliation and three-way reconciliation, etc. easily
produced?
• Is there an option to print trust checks and/or deposit slips?
3. Avoid Commingled Bank Trust Accounts
A client trust bank account is a special kind of account. Today, many
banks offer a particular type of trust account with separate
sub-accounts for each client.
A bank account that allows you to manage individual client funds
separately provides a double layer of protection for your firm because
a bank can also alert you to any client ledger overdraft situation.
Additionally, you will receive monthly client ledger trial balances
from the bank, which you can then match with your office client ledger
records.
4. Archive Closed Client Accounts
When a client matter has been completed, the balance on the client's
ledger is zero, and all transactions have been reconciled with the bank
statement, you should "close" or archive that client ledger. Otherwise,
over a period of time, you will be dealing with hundreds or even
thousands of "open" client ledgers.
5. Protect Your Trust Software Data File
While a computer or software can be replaced, lost data is not easy to
re-create. For trust accounts, always maintain a hard copy of each
client ledger on a monthly basis. Make regular backup copies of your
trust database files and store them at a remote location.
Automate Today and Put a Stop to Trust Fund Account Worries
Managing trust accounts is easier than you think. Start with a careful
review of your firm’s trust accounting processes. Begin using trust
account software designed to help you comply with state regulations.
Remember, a client A's money has nothing to do with client B’s money.
Your trust books should only contain open accounts. And, make an iron
clad rule to backup copies of data files and store them in a secure and
separate place. Follow these tips and you will bring order to your
trust bookkeeping, tighten controls and no longer worry whether or not
you are in full compliance with state regulations.
Also check out details for hud software, comprehensive and fully
automated real estate closing software.
Article Source: http://
www.articlesbase.com/business-opportunities-articles/trust-
account-bookkeeping-basics-1001773.html About the Author
Easy Soft has been a leading legal software
provider since 1986. We offer specialized solutions for real estate,
family law, trust account management, document automation, time
& billing, bankruptcy and estate planning. More than 15,000
customers use our legal software products to increase their office
productivity. Visit us online at: http://www.easysoft-usa.com. Learn
more about all our premier legal software products and services.
Contact: 800-905-7638, email: info@easysoft-usa.com |
