As the legal profession puts their feet up at the end of another trust year, the Trust Accounts Department is gearing up for another exciting trust compliance season. For all the sporting fans, this is the accountants equivalent of the grand final. Under the Legal Profession Uniform Law (NSW) and the Legal Profession Uniform General Rules 2015, a law practice is required to have its trust records externally examined if it has received or held trust money, excluding transit money during the trust year ending 31 March 2023.
Key Dates for your Diary
30 April – Annual obligation to lodge a Part A regardless of whether trust money was held or received. This is due to be lodged with the Law Society through our online lodgement module (OLM) by close of business on 30 April 2023.
31 May – Law Practices that have held or received trust money (other than PEXA power money, written direction money or transit money) during the period 1 April 2022 to 31 March 2023 must also:
- lodge a Part B through OLM; and
- ensure an External Examiner’s Report is completed by a designated External Examiner by 31 May 2023 and lodged through OLM.
Successful submissions by these key dates is critical to maintain the integrity of the safeguards in place to ensure trust money is being held in a manner that protects the interests of the person for whom it is held.
Why an external examination?
With over $7bn in trust money, we rely heavily on the External Examiners as our first line of defence to:
- confirm that the information submitted in Part B submissions are correct
- confirm that appropriate, prompt action was undertaken in any instance of overdrawing a trust matter ledger
- confirm that trust records have been properly kept in accordance with the provisions of the Uniform Law
- Detail any observed breaches of the Uniform Law.
A failure to comply with the external examination requirements may result in action being taken against you to either suspend your practising certificate until you complete the work, vary your certificate so you cannot handle trust money.
What’s new in 2023
- New guidelines were developed to support our External Examiners, who play a critical role in the examination of trust records (available here).
- An information sharing session and an opportunity for interested External Examiners to engage in a Q&A session was held on 1 May 2023.
- An External Examiners course was scheduled for 2 May 2023, to ensure we continue to develop the pipeline of eligible examiners.
- The Trust Accounts Department are undertaking a Quality Assurance Review of External Examiner Reports received. Reliance on the information provided within the External Examiners Reports is a critical component of the Trust Compliance Framework.
