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.