How is a trust account reconciled?
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A full 3-Way Reconciliation is required to be made each month. The Client Security auditors will request these documents when they audit your trust account. You perform the 3-Way Trust Account Reconciliation in the following manner: Show
Tip: A monthly statement from your bank is a vital part of the reconciliation process. If your bank has been providing statements on a quarterly basis instead of monthly, you will need to make arrangements to receive monthly statements or access monthly statement information electronically. A practicing lawyer or law firm must reconcile their trust accounts monthly. This is one of the most important functions that you perform with respect to the account records. Aside from providing a listing of outstanding deposits and cheques, it is a crucial internal control to aid in the identification of any mistakes or errors. Our How to... series gives practical tips and step by step guides on how to do lots of different things in Actionstep. We develop these based on the queries raised by customers with our support team. Our latest How to... looks at reconciling your trust accounts (or 'client accounts', as they are referred to in the UK) within Actionstep (manually or electronically):
Ok, lets dig in... 1. First, why should I know how to do this?Well, we all know why this is important. For Firms that use Trust bank accounts, reconciling these trust accounts is a very important aspect of ongoing compliance and administration. Reconciliation also gives you an overview of and clarity across your trust accounting records - matching them with transactions on your bank statement. 2. Where do I start in Actionstep?Trust reconciliations need to be completed at least once a month for compliance but it can be useful to reconcile more regularly than that. Once a period is reconciled, it is locked out to prevent any errors by back-dating transactions. Read more details in this article. To start a reconciliation, navigate to Trust-> Reconciliations-> Create Reconciliations. Select a trust account to reconcile. Processing your Trust Reconciliation There are two ways to reconcile within Actionstep: manual (printed) and electronic. Selecting the 'printed bank statement' option will require to manually refer between Actionstep's set of transactions and the ones provided to you by your bank, whereas the 'electronic statement upload' option will allow you to upload a copy of the transactions to the system and manage everything from within the page. Making adjustments to your trust reconciliation It is also possible to make adjustments to your trust bank reconciliation. For example, if there are any entries that are appearing in your bank statement but are not in Actionstep, you are able to make adjustments by entering in the amount "Out by..." to balance your trust bank reconciliation. When all entries and the reconciliation is fully matched, proceed to the next step. You will see a reconciliation summary, similar to the example below:  See a full step-by-step breakdown of reconciling your trust accounts here. 3. Generating reconciliation reportsNavigate to Reports-> Trust When generating trust bank reconciliation reports within Actionstep, you have two options to choose from - "an individual reconciliation" or "combined reconciliation by month." An individual reconciliation is where the default is the last complete reconciliation and combined reconciliation by month is multiple reconciliations generated into a report for the whole month. 4. How does reconciling your trust accounts help your firm?Our Trust Reconciliation process is designed to be simple to use and intuitive - allowing firms to stay compliant and maintain accurate client records without having to face an overwhelming administrative process. Actionstep gives you the option of reconciling trust accounts either manually or electronically to suit your way of working. How are accounts reconciled?To do a bank reconciliation you would match the cash balances on the balance sheet to the corresponding amount on your bank statement, determining the differences between the two in order to make changes to the accounting records, resolve any discrepancies and identify fraudulent transactions.
What are the four steps in the reconciliation process?The four steps in the bank reconciliation process is as follows:. Compare the deposits.. Adjust the bank statements.. Adjust the cash account.. Compare the balances.. What accounts must be reconciled?Accountants must reconcile credit card transactions, accounts payable, accounts receivable, payroll, fixed assets, subscriptions, deferred accounts, and other areas against the general ledger, or balance sheet.
What is a journal used for in regards to trust account?You must keep a trust account cash receipts journal, recording all money received daily. This must include the: number of the receipt. date the receipt was made out and, if different, the date on which the trust money was received.
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