Wednesday, December 19, 2012

Flat Fee Billing vs PCLaw Disbursements

First, what is flat fee billing. You quote the client an all inclusive price, and that is what the person pays. No extras, no disbursements. Many lawyers are already quoting flat fees for uncontested divorces, incorporations, wills, etc.

Why quote flat fees? Two reasons:
  • It is a great marketing tool. Clients really do want to know what a service is going to cost them. If you can offer them a set price right from the start, you are more likely land a new client.
  • It cuts down on your bookkeeping costs. Tracking disbursements and assigning them to the right client takes time. Just calculate your overhead and costs for everything, and give one price.
Other than the simplified services mentioned above, this is not something a novice lawyer should consider doing. You really do need to have a few years of practicing law to be able to establish your overhead and other costs. This billing practice also tends to be used only for simple uncontested matters.

A variation that can be used by almost any area of practice is block fee billing. For example:
  • One set price to prepare, issue, and serve a statement of claim, including the court costs and process server.
  • One set price for a full day of court, including travel, parking, etc.
  • One set price to prepare a motion, affidavit, court costs to issue, and service on opposing counsel.
Of course, you will want solid addresses for service, etc. before quoting a price. And, of course, the full day of court will cost the client more if it is in a different location. You might have one price for Toronto, another price for the GTA, and a substantially higher price for the attending the Supreme Court in Ottawa.

You may think that preparing claims, motions, and affidavits is too varied to quote a set price. But, you charge the same amount for boilerplate claims, motions, etc. The key is to make sure the pluses and minuses average out, to allow you to make approximately the same income. Therefore, you need to have the necessary experience in order to be able to predict these pluses and minuses.

From the bookkeeping side, you just pay your expenses as they are incurred, without any regard to whether it is a general office expense or a client expense. Your income in the form of these all inclusive flat fees will be considerably higher on your income statement. However, since you are no longer recovering any of your costs from clients, your expenses will also be higher. The goal is to reduce the amount of labour needed to 
complete your firm’s bookkeeping.

As always, I invite your comments and suggestions for future post topics. Next Posting – PCLaw Errors – Why they happen.


Sunday, November 25, 2012

LSUC and Credit Card Receipts

From the LSUC Bookkeeping Guide:
“Any credit card agreement that licensees enter into must provide that all service charges, discounts and other fees payable by the licensee to the financial institution are to be deducted from the licensee’s general account and that no such charges are to be deducted from the trust account.”
The Bookkeeping Guide later states:
“The procedures of some credit card companies place licensees in conflict with provisions in By-Law 9. Some credit card companies require merchants (including lawyers) to designate only one account into which credit card payments are to be deposited. Additionally, the discount charged by the company is automatically debited from this account.

This process will not permit licensees to receive by credit card both retainers and payments for billed fees and/or disbursements. Subsection 2(1) [sic. - 7(1)] of By-Law 9 requires licensees to deposit funds received in trust (e.g. retainers) into an account designated as a trust account. Meanwhile, subsection 8(2) of By-Law 9 prohibits the deposit into trust, funds that are “received by the licensee on account of fees for which a billing has been delivered...” "
The Bookkeeping Guide reaches this conclusion:
“Consequently the use of one account for both purposes is not permissible.”
However, that is not what By-law 9 actually says. In the second paragraph of this section on credit cards, The Bookkeeping Guide correctly states:
“The definition of “money” in By-Law 9 includes “credit card sales slips” and provides that credit card sales slips like other money received into trust, must be deposited to the licensee’s trust account not later than the following banking day.”
With any credit card company, the soonest that funds will be deposited is the next banking day. If you process the client’s credit card for deposit into your general account, and then IMMEDIATELY transfer the same amount to your trust account, you have complied with By-law 9 - “must be deposited to the licensee’s trust account not later than the following banking day.”

Since you have not actually received the credit card funds yet, you are advancing (loan) the funds to your client’s trust ledger. By transferring the funds from general, you have created a general disbursement that will be offset by an equal general receipt when the credit card funds are finally deposited by the bank. If you prefer, you can bill out the general receipt and disbursement on a separate invoice (net $0.00), to avoid confusion on the invoice submitted to the client.

As always, I invite your comments and suggestions for future post topics. Next Posting – Flat Fee Billing vs. PCLaw Disbursements Recovery.


Friday, November 9, 2012

PCLaw and The Conveyancer – Part 2


Part 1 of this article (May 22, 2011) explained how to manually transfer your invoice from Do Process LP’s The Conveyancer® software into LexisNexis Canada’s PCLaw® software in order to complete your bookkeeping records in PCLaw and reconcile your bank accounts.

Part 2 focuses on the new PCLaw Export feature for The Conveyancer, which Do Process released on November 9, 2012.


To use The Conveyancer / PCLaw Export feature, complete the following one-time setup:

1. Tell The Conveyancer where your PCLaw data is stored by entering the path or browsing to the “statdata” directory.

2. Create a directory in which to temporarily store the export data and enter the path to this directory into The Conveyancer. Note: You should set up this directory on your local Desktop or in your My Documents directory. If you set up this directory on a server or a shared directory, your data may be overwritten by another user.

3. Now that The Conveyancer has access to the data in the PCLaw directory, simply match The Conveyancer disbursements with your PCLaw explanation codes and G/L accounts, and define whether these disbursements are subject to HST.

Once you have completed these three steps, your setup is done. Note: If you change your PCLaw codes at a future date, be sure to amend The Conveyancer setup.


To use the PCLaw Export feature, follow these easy steps:

1. Open a new real estate matter in PCLaw.

2. Open a new file in The Conveyancer.

3. Copy and paste the PCLaw matter number into The Conveyancer file.

4. On Tab A, assign the responsible lawyer.

5. Complete the real estate transaction in The Conveyancer.

6. Enter one-off expenses on the fly by adding a new row. Note: Be sure to assign a PCLaw G/L account.

7. Export the fee and disbursement data from The Conveyancer.

8. Import the disbursement data into PCLaw.

9. Import the fee data into PCLaw.

10. Enter a transaction levy in PCLaw if it’s required for this matter.

11. Complete your PCLaw billing and transfer funds from trust to pay your invoice.

The removal of manual entries from this process eliminates any possibility for errors and saves you a great deal of time.

If you wish to complete the paper trail, staple the PCLaw invoice to The Conveyancer invoice.

As always, I invite your comments and suggestions for future post topics. Next Posting – LSUC and Credit Card Receipts.


Monday, October 22, 2012

Bank Errors and PCLaw – Part 2

On April 1st, 2012, we discussed the uses of the PCLaw Bank Error feature when doing the monthly bank reconciliations. This feature should only be used for actual bank/teller errors, but it is often misused to record bookkeeping mistakes.

I recently had a rather lengthy discussion with a LSUC auditor over this very subject. In this case, my client had mistakenly taken more trust funds than were on deposit for a particular matter (prior to PCLaw being used). Therefore, the funds needed to be paid back, requiring a General to Trust transfer. The auditor was of the opinion that the entry was self corrected by the deposit of new trust funds by my client’s client the following month.

That may be true as far as the LSUC (or this individual auditor) is concerned, but it has there are other things to consider. For example:
  • Revenue Canada considers deposits from clients into your general account as income. If, in the above example, you do not record the General to Trust transfer as a disbursement, and amend your billing, CRA will consider the whole deposit as fees, and assess you income taxes the whole amount. 
  • LSUC – if you leave the client’s trust ledger in an overdrawn state for more than a month, you will have to report this on your Lawyer Annual Report. Instead, you can just have an outstanding receipt for the General to Trust Transfer.

As always, I invite your comments and suggestions for future post topics. Next Posting – PCLaw and Conveyancer – Part 2.


Tuesday, October 9, 2012

PCLaw and Fraud Prevention

The following is not meant to be an exhaustive list, but rather a starting point, which you should adapt to the specific needs of your own law practice.

First and foremost, prepare (or have prepared for you) a monthly trust comparison report. These reports should be completed by the 25th day of the following month. Take some time to thoroughly review the report, and ask your bookkeeper questions if you find things do not appear to be as you believe they should be.

Office Practices:
  • ensure each incoming cheque is stamped with a “deposit only” endorsement
  • issue pre-numbered receipts to clients for cash or cheques received
  • clients should be asked to sign cash receipts, to avoid later disputes over amount received
  • ensure cash/cheques are deposited by the end of the next banking day
  • if deposits are not made immediately, are they are locked in a safe location?
Staff – separation of duties
  • one person opens the mail and a separate person deposits funds
  • one person deposits the cash/cheques, another person enters the receipts in the accounting records
  • ensure deposit slips match accounting records
  • verify sequence of numbered receipts – ensure they match accounting records
  • scrutinize your trust and general bank account statements, looking for:
    • returned cheques
    • any unusual transactions
    • compare trust bank account balance(s) with client trust listing
  • review the monthly bank reconciliations, looking for:
    • outstanding items and follow up on them
    • stale-dated cheques over six months old
    • review the client trust listing for overdrawn and inactive accounts

Cheque Preparation Policies

Many times, staff prepare cheques for signing by the lawyer
  • stamp original copies of invoices "paid" to prevent being paid more than once
  • only original invoices, and not photocopies, required when signing cheques
  • confirm the service was indeed provided, or the disbursement is proper
  • trust account cheques clearly marked “trust”
  • general account cheques clearly marked “general”
  • trust cheques and general cheques different colours to avoid confusion

Trust cheques
  • review reasonableness:
    • Minister of Finance – trust cheque trust should accompany the claim/defense/motion/ etc. to be filed
    • other disbursements should have the original invoice
    • payable to your firm, should have your own invoice prepared
  • confirm client has adequate trust funds


The data in accounting programs can be changed, to cover up / hide fraudulent activities.  PCLaw can be used for fraud prevention by reviewing audit trail reports – Reports - Audit trail reports. You primary interest would be the general and trust bank journals, and the general journal – deselect the others. You will want to include corrected entries. Review the corrections, to see if any attempts are being made to deliberately manipulate the data.

As always, I invite your comments and suggestions for future post topics. Next Posting – Bank Errors and PCLaw - Part 2.

Monday, September 10, 2012

LSUC Audits and Accounting Programs like PCLaw

(I’m back! I have been fighting a nasty virus all summer. I have been just trying to keep up with my daily workload, with no time or energy for writing. Feeling much better now!)

In the past 3 months I have been retained by 3 solo lawyers who unable to complete their LSUC audits. In one case, the lawyer was the subject of a LSUC initiated Disciplinary Complaint for poor bookkeeping.

In each case, the lawyer was using Word tables or Excel sheets to create client ledgers. In most cases, the client ledgers were detailed in the handling of the individual client’s funds, but there was no method being employed to track the overall picture.  There was also no method being used to create the journals required for proper record keeping.

Minimum Requirements (LSUC)
  • Trust receipts / disbursements (trust bank journal)
  • Client ledgers
  • Trust transfers record
  • Receipts / disbursement not trust (general bank journal)
  • Record by date of fees / disbursements charged to clients (billing fees journal)
  • Monthly trust bank reconciliations and trust listings
The Word/Excel client ledgers only met one of the minimum requirements. It is possible to maintain all of these records in Word or Excel, but it is not an easy task. The problem is that these manual entries are not linked. You have to manually update the clients ledger for your invoice and payment. Then manually update the trust disbursement, the general receipt, and the billing fees record. With all these manual entries being made, it is easy for numbers to get transposed or other errors to be made. It is also a very labour intensive process.

The reason accounting programs were invented was to make record keeping easier. If you do not have a trust account, buy yourself a program like Quickbooks or Simply Accounting. If you have a trust account, PCLaw is the most comprehensive legal accounting program available. Purchase a program and make your life a whole lot easier. And the next time an auditor comes to visit you can be confident in the status of your records.

As always, I invite your comments and suggestions for future post topics. Next Week – PCLaw and Fraud Prevention.


Sunday, July 15, 2012

PCLaw and LSUC Audits – Next Steps

At the end of the audit, you will be given an audit report, itemizing any issues that need your attention. Seventy percent of audits uncover only minor issues, which the auditor will discuss with you. You must take steps to correct your bookkeeping practices as per the auditor’s instructions.
The auditor can return a few months later to check on your progress, and failing to correct your bookkeeping practices can have dire consequences.
If more serious problems are found, the auditor can immediately issue a compliance order and you may be prevented from using your trust account. The compliance order will direct you to correct deficiencies and impose a short deadline for the work to be completed.
If you fail to comply with the auditor’s instructions, your file can be turned over to the LSUC’s Discipline Committee. You are still given every opportunity to correct deficiencies, and can avoid a full hearing if you can satisfy the investigator that you have brought you records up to LSUC standards.
If you still do not correct your bookkeeping, you can ultimately be disbarred by the LSUC.
As always, I invite your comments and suggestions for future post topics. Next Week - LSUC Audits and Accounting Programs Like PCLaw.

Tuesday, June 19, 2012

PCLaw and LSUC Audits – What to Expect


Pursuant to s. 49.2(1) of The Law Society Act:

“The Society may conduct an audit of the financial records of a licensee or group of licensees for the purpose of determining whether the financial records comply with the requirements of the by-laws.”

The purpose of audits is to fulfill the LSUC’s mandate of protecting the public. The primary focus of the audits is therefore concentrated on your trust account. The auditor does also review your general account, to ensure payments are applied properly to client receivables.

Each year, you have about a 1 in 14 chance of being audited (about every 5 years). If you are a new practice, you will be audited about 1 year after you open. Ideally, the audit process should be viewed as an opportunity to learn what you should be doing. Auditors are usually happy to explain any problems found and what needs to be done in the future.

I have already discussed the most common spot audit problems, in the blog postings of November 2010 to January 2011. These older postings can be viewed at any time in the archived section of the blog website.

You will receive notification of the audit approximately 2 weeks before the scheduled date. You will be asked to prepare some photocopies ahead of time, for use on the audit date. If you have Private Mortgage or Power of Attorney matters, you will be asked to provide some additional information to the auditor 1 week prior to the audit date.

The balance of the documentation will be requested “on demand” during the course of the auditor’s site visit. You, or your staff/bookkeeper, must be able to immediately generate the various accounting reports from PCLaw, as/when requested. You must be able to answer any questions posed by the auditor, as to why certain bookkeeping entries were made. This is why the LSUC suggests that you may wish to have your bookkeeper attend the audit, if you are uncomfortable with bookkeeping and/or a newer PCLaw user.

You must be able to produce copies of any supporting documentation, like invoices, trust ledgers, mortgages, receipt books, cancelled cheques, bank statements, etc. You need to provide a copy of your latest filing for your LawPro transaction levies, or your exemption.

Prior to the audit, make sure your records are current, and any issues on your current bank reconciliation reports have been corrected. If you have outstanding bank errors on the report, have the bank reverse the entry or otherwise fix the error. Obtain copies of these transactions, to show the auditor the errors were fixed. Clean-up any outstanding deposits, and place stop payments/reissue any stale cheques.

As always, I invite your comments and suggestions for future post topics.  Next Week – PCLaw and LSUC Audits – Next Steps.


Monday, June 11, 2012

Transaction Levies and PCLaw


Pursuant to By-law 6, a lawyer or law firm that acts for one or more parties on a real estate transaction must pay the Law Society a real estate transaction levy surcharge of $65.00 per transaction inclusive of all taxes.

Some additional information on real estate transaction levies:

Likewise, a lawyer or law firm that acts for one or more parties on a civil litigation matter must pay the Law Society a civil litigation transaction levy surcharge of $50.00 per transaction inclusive of all taxes.

Some additional information on civil litigation levies:

Enabling The Transaction Levy Feature In PCLaw

Before using the Transaction Levy feature in PCLaw, the feature must be enabled on the System Settings - Provincial Tab. Newer versions of PCLaw have noted the January 1, 2010 rate change for real estate transactions in Ontario.

Setting Up Transaction Levies

To charge a transaction levy, the lawyer must have a valid LSUC number. This number is entered in PCLaw on the Lawyer and Rates - Provincial tab.

Posting A Transaction Levy

Transaction levy charges are posted to matters via Data Entry – Transaction Levy. For real estate, you select who you are acting for and the documents filed. If acting for both sides in a real estate transaction, you can enter the levy for both matters with one entry. For civil litigation, you select the type of claim/defence filed with the court.

If you have a busy practice, you can add a Transaction Levy button to your Quickstep menu.

As always, I invite your comments and suggestions for future post topics. I missed publishing last week because I was helping a new client, who came to me after he failed to pass his LSUC audit. It has occurred to me that I should write something about the subject. Next Week – PCLaw and LSUC Audits – What to Expect.


Monday, May 28, 2012

PCLaw and Payroll Entries


Larger firms may use payroll services, but small firms usually handle all the payroll entries themselves.

The CRA website contains all the information you need to calculate payroll deductions and employer remittances.

I use the formulas in Excel sheets to calculate deductions, employer remittances, and vacation pay. The totals are calculated throughout, and the final information can easily be transferred for completing T4 slips. I customize each Excel file for each client, as everyone has different needs.

The easiest way to enter payroll is through a general cheque entry, and ideally entering all the information at once. For example:

  • enter the employee’s name, the date, etc.
  • the cheque amount is for the net payroll amount
  • explanation code pay, sal, etc. – set the code to the Payroll/Salaries G/L expense account
  • for the expense G/L amount use the gross pay
  • next line - etd explanation code – set to the ETD payable G/L liability account
  • enter the amount you have deducted from the employee’s pay
  • eie expense code – set to EI expense G/L account or Payroll/Salaries G/L expense account
  • enter the employer EI amount
  • cpp expense code – set to CPP expense G/L account or Payroll/Salaries G/L expense account
  • enter the employer CPP amount
  • etd explanation code – enter the total of the employer EI and CPP amounts

All the expenses have been recorded in one entry, and the ETD payable account contains the total amount that needs to be remitted to CRA. Repeat for each employee and each pay period. When time to remit (monthly or quarterly), issue a cheque to CRA for the balance of the funds in the ETD payable G/L account at the end of the period.

As always, I invite your comments and suggestions for future post topics. Next Week – PCLaw and Transaction Levies.


Sunday, May 20, 2012

PCLaw and Can. Deposit Insurance Corporation


If you have a trust account, by now you have no doubt received a notice from your bank requesting information on the clients’ trust account balances. Why are they doing this? Your account is covered by deposit insurance, but only up to $100,000. If your practice involves estates or real estate, your trust account probably contains an amount much larger than this. Listing the trust beneficiaries separately allows for $100,000 in coverage for each of your clients.

The banks give you the option of reporting client name and address, or you can maintain your clients’ privacy by providing only a client code (in PCLaw it is known as client nickname).

Reports – Client – Trust listing – date April 30, 2012 – select Totals only – This will produce a list showing the client, their address, and their trust balance.

To get a list with only client codes - Reports – Client – Trust listing – date April 30, 2012 – select Totals only – then select Change to modify the report template. Change the report name at the top – for example “banklist”. In the right-hand box, highlight the client name – click remove – highlight client address – remove – then OK to save the template – change banklist to default – NO – then OK to generate the trust listing.

As always, I invite your comments and suggestions for future post topics. Next Week – PCLaw and Payroll Entries.


Thursday, May 10, 2012

PCLaw and Work In Progress Disbursements From Trust


Pursuant to By-law 9, s.9.:

9. (1) A licensee may withdraw from a trust account only the following money:

1. Money properly required for payment to a client or to a person on behalf of a client.

2. Money required to reimburse the licensee for money properly expended on behalf of a client or for expenses properly incurred on behalf of a client.

3. Money properly required for or toward payment of fees for services performed by the licensee for which a billing has been delivered.

4. Money that is directly transferred into another trust account and held on behalf of a client.

5. Money that under this Part should not have been paid into a trust account but was through inadvertence paid into a trust account.

This week we are discussing number 2 on the above list. PCLaw can be set to “Allow Trust transfers for WIP” in Options - System Settings – Banking tab.

For example, when you pay the Minister of Finance for a court cost with a general cheque, you are permitted to transfer this amount from trust to reimburse the general account.

When you review the client ledger, you should find the disbursement and a general retainer for the same amount.

Billing – be sure retainers are selected on “Other” tab, so that the general retainer receipt and the disbursement cancel each other out.

Be aware that expense recovery items are sometimes not true disbursements. For example, photocopies may cost you 2 cents but you bill the client 10 cents. This mark-up represents income, and should not be paid from trust until billed.

As always, I invite your comments and suggestions for future post topics. Next Week – PCLaw and Can. Deposit Insurance Corporation.


Sunday, April 29, 2012

PCLaw and an Error Correction Riddle


Every once in a while I come into contact with hands on lawyers, who are very knowledgeable of bookkeeping procedures. The reason they are calling me is because their previous bookkeeper left, or they have been struggling to do the work themselves, and things are not balancing.

The Setup

With deference to the LSUC, Leslie Lawyer has been in practice for 15 years, and opened her own firm 5 years ago. The rate she bills out at is $350 per hour. She has an intimate knowledge of all of her clients and matters. This is to be expected; after all, it is her business we are talking about. She has a good understanding of basic bookkeeping, including bank reconciliations. Her working knowledge of PCLaw is limited to the minimal on-the-job training she received to complete daily tasks. She has received no extra training, and has no advanced knowledge of error correction procedures. She has not been able to balance her books, but if she set aside the time, she could probably work through all of the problems. She does not know how to correct the errors, but could do some work-around adjusting entries to balance. The work-arounds’ may not be to LSUC standards, and even with her intimate knowledge of individual matters, it will still take her 30 hours to finish this project.

Bobbie Bookkeeper is a self-employed bookkeeper who works for many different lawyers. She charges $35 per hour. She has received extra PCLaw training, and has advanced knowledge of error correction procedures. She has no knowledge of Leslie’s clients or the individual matters. She will need to ask lots of questions to gain the required information, but these could be directed to a member of Leslie’s staff. She has reviewed the status of Leslie’s books and advised that properly removing the past 5 years’ of errors and balancing the books to LSUC standards could take up to 100 hours of her time.

The Riddle

How much money does Leslie lose by doing the work herself?

As always, I invite your comments and suggestions for future post topics. Next Week – PCLaw and Work-In-Progress Disbursements From Trust.


Sunday, April 22, 2012

PCLaw and Excel

When you run reports in PCLaw, the normal practice is to print them and/or save them. The report toolbar at the top also displays an icon for Excel, which allows you to convert the static report information into a spreadsheet.

PCLaw reports already have a lot of variables available to you, especially if you select the advanced options. But exporting the report into a spreadsheet allows you to manipulate the data in ways limited only by your imagination.

To get the most out of this feature, you need to have a good understanding of how to write formulas. The “Help” in Excel is very good, and there are many online forums that can assist you even further. The idea is to develop standard formulas for the results you want. You can then copy this formula from your old spreadsheet into a new one, thereby instantly obtaining the new information that you want.

I use these worksheets often for error correction. If you want to know what is different on two reports, export both of them into spreadsheets. I usually delete the columns I do not need, keeping only those columns will help me.

For example, try comparing the trust bank journal with the trust bank general ledger. Doing a True or False comparison with the “Entries” numbers in both reports will quickly locate the missing or extra entry. You can also sort the entries from largest to smallest, thereby allowing you to quickly locate a number that only appears on only one report.

As always, I invite your comments and suggestions for future post topics. Next Week – PCLaw and an Error Correction Riddle.


Sunday, April 15, 2012

Year-end Review and PCLaw

Last week, our concern was getting your books cleaned-up for your accountant.  Typically, you will want to meet with you accountant after your taxes have been prepared. After reviewing your financials, your accountant will be in a much better position to offer you advice. However, for you to get the best advice, you need to come to the meeting fully prepared.

Print off a copy of your financials. Make a list of any questions you have. Is there any specific area you need advice on? Do you have an issue that you are concerned about?
The goal is to seek ways to reduce your expenses and increase your sales, and thereby increase your net income. Year-end is also a time to review your fee structure. Rising costs can mean that you need to raise your hourly rate just to maintain the same income as last year.

Besides the obvious financial statements, PCLaw can also generate other useful reports to help you improve your business. By selecting different options on standard reports, you can learn a great deal. For example:

You can run you billing fees journal and select to sort matters by type of law. This type of information is useful for planning your marketing efforts. Do you need to increase your marketing in some areas where you want to grow? Did your marketing decisions from last year pay off in increased billings in the area of law you were targeting with your advertising dollars?

Run an Client Costs journal report, on the “Other” tab select the expense code for photocopies. Typically, your fax machine is now part of an all-in-one printer, so you need to add this result to the photocopies amount. Compare this with your photocopy expenses for the machine, toner, paper, etc. Do you need to adjust the amount you are charging?

Can you reduce your telephone expenses by bundling into one invoice?

Are your staffing levels appropriate to the volume of work you do? Virtual assistants can provide additional support without the overhead of an on-site employee. It can be as simple as differentiating work that has to be done in the office.  Filing, faxing, photocopying, etc. has to be done where the documents are physically present. Documents – letters, pleadings, etc. – can be typed anywhere.

These are just a few of suggestions. The point is, all the data has already been entered into your PCLaw program, There is a wealth of information contained within this data which is freely available to you. Your bookkeeper can assist you with mining this data and running comparative reports.

As always, I invite your comments and suggestions for future post topics. Next Week – PCLaw and Excel.


Sunday, April 8, 2012

Year-end Clean-up in PCLaw


It is tax season – time to get your financial statements cleaned-up, so that you can forward them to your accountant.

First, make sure all of your reconciliations have been completed. Your December bank accounts should have already be reconciled by January 25th.

Run “Verify Data Integrity”. This should correct most hidden or imbalance errors.

Then run a G/L Reconciliation report, and correct any errors found on here.

Your accountant can offer you great advise, but you are the person with the most knowledge of your own business. Prepare and review draft financial statements. Look for:

- Items posted in the wrong G/L accounts.
- Multiple accounts of a similar nature - consolidate into one?
- Are there negative expense or income accounts?
- Missing any purchases made with petty cash or credit card?

Now that everything has been entered, and you have confirmed your ledgers have no errors, you can run your HST report and remit it or post it as a payable.

You are now ready to forward your financials to your accountant.

You can close out any open months, up to and including November. Now is also a good time to archive matters that have been completed.

While your accountant is working, you have time to take a second look at your financials - Next week’s topic.

As always, I invite your comments and suggestions for future post topics.


Sunday, April 1, 2012

Bank Errors and PCLaw


In many cases, my clients retained my services after their previous bookkeeper changed careers, moved, or retired. As such, I get to see the work product of many other bookkeepers.

It has come to my attention that a lot of bookkeepers are misusing the bank error feature, when doing the monthly bank reconciliations. In many instances, the bank error feature was used to record bookkeeping errors. The bank errors feature should only be used to record errors actually made by the teller or bank, and nothing else.

Obviously, no one likes to admit they have made a mistake, but we are all human beings, and therefore fallible.

PCLaw has build in checks and balances to prevent things like overdrawn client trust ledgers while writing trust cheques. Bookkeeping errors do occur more often when using handwritten cheques, so I would encourage the printing of your cheques if possible. With handwritten cheques, the entry is often made after the fact, and only then is the error revealed.

When you make a mistake, resist the urge to record it as a bank error. Instead, record the events as they actually occurred. Then enter a correcting entry. That way, the transactions appear on the bank journal and other reports, making it easy to monitor outstanding issues. Entering the mistake as a bank error means that it is not searchable, and therefore much more likely to be forgotten until the next month’s bank reconciliation.

For situations involving overdrawn client trust ledgers, PCLaw should prevent you from entering the transaction. But, since the ledger is overdrawn, you will need to return some funds to trust, to at least bring the ledger back to a zero balance. Simply enter the required general to trust transfer first, then you can enter the mistaken transaction.

As always, I invite your comments and suggestions for future post topics. Next week – Year-end Clean-up in PCLaw.


Tuesday, March 27, 2012

Handling NSF Trust Receipts in PCLaw


There are two main methods used to handle NSF trust receipts:

  1. The NSF is returned by the bank within the trust account. This is a simpler method, but your trust account can end up becoming overdrawn. When using this method, be sure to have overdraft protection in place, to prevent your own trust account cheques from going NSF.
  2. The other approach is to have the bank take the trust NSF funds from your general account. That way, you never have to worry about your trust account being overdraw or NSF trust cheques. You will still want to have overdraft protection on your general account.

If the these trust funds have not been distributed, and you are using Method 1 - simply Void/NSF the trust receipt.

If using Method 2, write a general cheque payable to your bank, enter the matter number, and in the explanation box add a note regarding the trust NSF. Bill the matter, and use the trust funds still on deposit in your trust account to pay this invoice – thereby reimbursing the general account.

When using either approach, problems will arise if the trust funds have already been distributed prior to your being notified of the NSF. If you try to just void the trust receipt, you will probably get a error message that the client’s trust ledger will be overdrawn.

When using either Method, do a General to Trust Transfer in PCLaw and deposit this cheque into your trust account.

If using Method 1, the client ledger will now have sufficient funds, so you can now Void/NSF the original trust receipt.

Using either Method, bill the client, and pay your invoice if there are any trust funds remaining.  The client will now have an accounts receivable balance equal to the funds that were distributed prior to the NSF.

As always, I invite your comments and suggestions for future post topics. Next week – Bank Errors and PCLaw.


Sunday, March 18, 2012

Remnant Invoice Errors in PCLaw


Quite often when making corrections, you receive a message that you cannot change an entry because it has been billed. For example, this happens a lot when dealing with hand-written cheques. When you are doing the bank reconciliation you may find some numbers have been transposed on the entry.

To correct the entry, you need to undo the invoice. But first, you need to remove any payment made on the invoice. Next, Billing – Undo billing – enter the invoice number – hitting tab will populate the matter, etc. - OK.

Before doing the above, either print a copy of the client ledger, or write down the cheque/receipt numbers, invoice number, dates, etc., for reuse when rebuilding the ledger.

You have now undone the invoice, but, when you again try to correct the entry, you still receive the same error message that the entry has been billed. Review the client ledger – Ctrl-L – Matter number - OK. You will find that the invoice number you have just undone still appears one or more times on the ledger. Until these invoice remnants are removed, you cannot change these entries.

To remove, Billing – Bill or Ctrl-B. Enter the matter number and the same invoice number – OK. You will get error message – invoice number already used – YES – reset invoice number - NO. When you get to “Accept or change …” window – OK – then hit cancel. Review the client ledger again, and all traces of the invoice should now be gone.

Correct the entry you started out trying to fix, then redo the billing and payment(s).

As always, I invite your comments and suggestions for future post topics. Next week – Handling NSF Trust Receipts in PCLaw.


Sunday, March 11, 2012

PCLaw and LSUC Lawyer Annual Report


As a lawyer in Ontario, you are required to file your Lawyer Annual Report by March 31, 2012. Failure to file can result in an Administrative Suspension.

If you answer “No” to the question “Do you have a trust account?”, then completing the financial section of the Lawyer Annual Report is relatively quick. However, once you answer “Yes”, the screen suddenly fills with numerous questions that need to be answered, including some math questions.

If you have been following this blog for sometime now, you will know that I have previously mentioned completing a monthly Trust Comparison Report, as is required by Bylaw 9, s.18(8).

And, if you have indeed been completing the required Trust Comparison Report, completing the math section will be a breeze. All you need to do, is transfer the information from the Trust Comparison Report to the Lawyer Annual Report, and you are done the math section.

For a review of Trust Comparison Reports, see – December 5, 2010.

And do not forget to fill out The Law Foundation of Ontario’s Form 1 as well.

As always, I invite your comments and suggestions for future post topics. Next week – Remnant Invoice Errors in PCLaw.


Sunday, March 4, 2012

The Most Common PCLaw Errors – Duplicate Entry Errors


Duplicate Entry Errors occur when you try to alter a previously saved entry. Most often, this occurs when you change an entry from within the Register or Bank Reconciliation windows.

What happens:

- you locate an entry that you need to change

- you open the entry (double click or change button), and make the correction

- when you click OK, you receive an error message: “unable to connect with original entry”

- when you return to the original window (bank rec./register), two entries will now being showing instead of one

Not a big deal if a normal expense entry – like rent – just delete the one you do not want.

However, if this is a client disbursement cheque, with multiple matters, and/or the disbursement been billed, PCLaw will not let you delete the duplicate cheque. You will have to undo the bills, then you can delete the duplicate cheque, then redo the bills. Make sure you keep track of the billing dates and invoice numbers.

As always, I invite your comments and suggestions for future post topics. Next week – LSUC Lawyer Annual Report – Financial Section.


Sunday, February 26, 2012

The 7 Most Common PCLaw Errors – Hidden Errors


Hidden Errors are usually the result of deleting an entry, but a remnant of the entry is still present within the PCLaw data.

For example, I once had an entry that had been deleted, but it still appeared on an older bank reconciliation report – without remnant of this entry the reconciliation would not have balanced.

There are error messages within PCLaw that are designed to prevent you from altering data saved to bank reconciliations. In this instance, the error message was somehow overridden.

When searching the entire general bank report (all dates), the entry amount did not appear. By searching for the same amount in corrected entries, I was able to quickly locate the offending item.

As always, I invite your comments and suggestions for future post topics. Next week – Duplicate Entry Errors.


Monday, February 20, 2012

The 7 Most Common PCLaw Errors – Read/Write Errors

Read/Write errors can be one of the hardest errors to both find and fix. The main difficulty is that the data has all been entered correctly. The receipts, disbursements, invoices, etc. are correct, but, for whatever reason, PCLaw is reading the data incorrectly. When PCLaw writes reports, on display or print, the reports do not add up correctly.

For example, I recently had a client ledger that showed all the invoices correctly, and also correctly showed all the payments made as against these invoices. But, the A/R balance was not correct.

The cause of these errors means they are usually referred to as a “server error”. But, this error can appear even though you are running PCLaw on a dedicated PC, rather than a server. A simple thing like a fluctuation in the hydro supply is all that is needed to cause the error. Therefore, just rebooting the PC or server may clear the error for you.

Depending on the error, sometimes just redoing the last few entries will fix the problem. Other times, it may be necessary to undo all the payments and invoices, in order to rebuild the client ledger from the beginning.

As always, I invite your comments and suggestions for future post topics. Next week – Hidden Errors.


Tuesday, February 14, 2012

The 7 Most Common PCLaw Errors – Partial Posting Errors


A partial posting error occurs when an entry is posted to one sub-ledger but does not appear in the linked sub-ledger.

Some examples:

- A cheque issued from the general bank does not reduce your accounts payable balance or appear in the payments listing

- A cheque issued from the general bank does indeed reduce your accounts payable balance but this time it does not appear in the general bank journal or the bank reconciliation

- Accounts receivable receipt reduces the receivable, but does not appear in the bank journal or reconciliation

Fairly easy to correct. Simply remove the offending entry and redo it – just confirm that it now appears in both journals before moving on.

As always, I invite your comments and suggestions for future post topics. Next week – Read/Write Errors.


Sunday, February 5, 2012

The 7 Most Common PCLaw Errors – Posting Errors (PCLaw generated)


As we discussed last week with accounts Receivable errors, PCLaw can from time-to-time generate errors by misallocating data already entered. In my experience, the errors being discussed this time most often occur with the Input Tax Credits on expense entries that are actually non-taxable.

What happens:

You post a non-taxable expense.

It does not matter which bank you use, or if you use Accounts Payable to post the expense.

Your cheque is for the correct amount, and your bank will reconcile, which is why using the G/L reconciliation on a monthly basis is so important.

When you locate the offending entry, you will find the correct cheque amount, the expense amount, and a tax amount showing on the bank or A/P report.

Simply remove the entry and redo. Run your report again and confirm the new entry is correctly posted.

As always, I invite your comments and suggestions for future post topics. Next week – Partial Posting Errors.


Sunday, January 29, 2012

The Seven Most Common PCLaw Errors – Accounts Receivable Errors


This posting on accounts receivable errors is partly a rehash of previous entries, with some new content added.

As previously discussed, problems can occur when paying multiple invoices/matters at one time – especially if you are paying them out of chronological order. Doing separate payments for the individual invoices will avoid creating this error.

The second error is actually related to billing, but the error result shows up on your accounts receivable report. You have done your bill, entered the payment receipt from the client, but when you run your accounts receivable report, a balance is still showing. Most often, the billing process has captured one time entry two times, and the second time PCLaw seems to treat it as a non-taxable disbursement. So, you end up with a bill for $200 + $26 HST, totalling $226. But your A/R report will show $426.

To catch this error early, compare your billing fees journal to your A/R report on a monthly basis. To correct, remove the payment, undo the bill, redo the bill, and repay.

Since the payment must actually be removed before you can undo the bill, discovering this error a year later is very costly. You must open all of the bank reconciliations in order to correct.

As always, I invite your comments and suggestions for future post topics. Next week – Posting errors (PCLaw generated).


Sunday, January 22, 2012

The Seven Most Common PCLaw Errors – Trust Errors


Trust errors tend to increase when multiple trust bank accounts are used, and when clients have multiple matters. Within this category of trust errors, there are 3 errors that are commonly found:

- simple trust posting errors, usually involving posting the wrong amount or posting to the wrong matter. Just locate the error and correct the entry.

- negative matter trust balances – sometimes the client has sufficient trust funds, but they are not distributed to the various matters as needed to eliminate the negative balances. These errors will reveal themselves when you compare your trust bank reconciliation to your client trust listing.

-  depositing funds or posting to the wrong trust bank account is another common mistake when multiple accounts are used. Simply viewing the client ledger or the client trust listing does not easily draw your attention to this error. Instead, you must run separate client trust listings for each bank account. You may need to transfer funds to correct this error.

As always, I invite your comments and suggestions for future post topics. Next week – Accounts Receivable Errors.