Prior to your LSUC Spot Audit, you will receive a letter outlining the period of the audit, typically from the audit date back 1 year - to the nearest month end. If you have them, you will be required to email a detailed list of Private Mortgages, and a detailed list of Power of Attorney and Estate matters. If you have a lot of these types of files, the auditor will advise you which files have been selected for auditing.
During the audit, you will be required to provide photocopies of bank statements, bank reconciliations, and Client Trust Listings – typically the most recent month and the prior December 31st. If you do electronic banking for any trust transactions, you will need to provide photocopies of the applicable Form 9 a, b, or c.
The auditor will usually have you run the Bank Journal report for a randomly selected month, and all of the matters with transactions appearing on this report will form the basis of the audit. All of the files and paperwork to support the transactions will be examined. If anything is unclear, you will need to be able to satisfy any of the auditor’s questions.
The Private Mortgage, Power of Attorney, and Estate files previously selected by the auditor will also be examined, even if they have no transactions in the randomly selected month. The auditor will likely ask for additional PCLaw reports related to these matters.
The auditor will also want you to run Client Summary reports, selecting for general retainers and negative unbilled disbursements. These represent client funds on deposit in your general account, which is not allowed. On audit day, these reports should show $0.00 balances.
As always, I invite your comments and suggestions for future post topics. Next Posting – PCLaw And LSUC Audits – Prepare Ahead.
Clyde
Hiring a bookkeeper for your law firm is one of the most important decisions you will make in your practice. After all, this is your livelihood we are talking about. As previously discussed, poor bookkeeping can have dire consequences, up to and including disbarment.
Education vs. Experience
In my opinion, both are equally important. You are hiring a bookkeeper, not an accountant. The level of education should therefore be appropriate. Hiring a chartered accountant to do your regular bookkeeping is both overkill and extremely expensive. Nor would you want someone with their brand new accounting degree, but no real world experience. The key is to find the right balance between adequate education and practical experience. I strongly recommend hiring an accountant to do your taxes and provide basic oversight of your bookkeeper.
PCLaw
PCLaw handles all aspect of legal bookkeeping: general bank, trust bank, accounts receivable, accounts payable, expense recovery, invoices, and HST / Payroll taxes. It is a very complex program, and using the wrong methods when doing entries can create errors. Your bookkeeper should be familiar with how to fix problems created by other staff as they occur. Your bookkeeper should also be able to assist staff with ongoing training and be available to answer questions as they arise from time to time.
Other Considerations
Hopefully your prospective bookkeeper possesses a strong aptitude for numbers, which drew him/her to a career that they find enjoyable and satisfying. Some hobbies to look for include any kind of logic puzzles: Challenger, Kakuro, Sudoku, Sticklers – but not crossword puzzles. Crosswords are good for building your vocabulary, but logic puzzles use the same part of your brain that will help figure out why your bank account will not reconcile. A good puzzle solver will will be much more efficient with your bookkeeping.
Is your prospective bookkeeper accessible: easy to talk to, available to answer questions,
available to assist your staff? Doing the monthly reports/reconciliations if fine, but oftentimes you will want to answers or advise throughout the month.
As always, I invite your comments and suggestions for future post topics. Next Posting – PCLaw And LSUC Audits.
Clyde
