Legal practices across South Australia must ensure they are fully prepared for the annual external examination of their trust accounts and records, extending to all forms of trust money.
While the financial year-end presents competing demands, proactive preparation can yield significant rewards. Our Legal Industry Specialist, Sharon Spence, who was a senior investigator with the Law Society of South Australia for 15 years, has seen firsthand how lawyers who fail to properly prepare for the external examination process often find themselves burdened with excessive time, costs, and energy to satisfy additional examiner and regulatory requests. These challenges can be easily avoided with early action.
Practitioners who neglect to address trust accounting errors, omissions, or irregularities, relying on the examiner to correct them before submitting their report to the regulator by 31 October, may face serious consequences. These could include contravention notices, corrective action directives, or even potential referrals to the Legal Profession Conduct Commissioner.
Why Timely Action Matters
Regulatory compliance is non-negotiable. The regulator must be assured that client funds are properly accounted for, and response times for corrective action directives are often tight, leaving practitioners with limited windows to rectify issues. The longer a compliance matter is unresolved, the greater the strain on resources which are required to be engaged with the regulator to rectify the issue. This impacts both financial and operational efficiency within your practice.
Failing to prepare today can result in significant repercussions, requiring practitioners to review client files, reconcile ledgers, scrutinise bank accounts, draft extensive responses, and provide supporting documentation. Moreover, additional time and effort must be invested in refining procedures, implementing safeguards against future issues, and providing staff training to ensure compliance is upheld. As Benjamin Franklin wisely stated, “By failing to prepare, you are preparing to fail.”
Looking Beyond the Immediate Examination
Now is the perfect time to assess where your practice stands from a regulatory compliance perspective. Consider whether your trust accounting processes require professional oversight, or if you are willing to take risks that may lead to heightened regulatory scrutiny.
Remember, compliance is not a one-time task, it is an ongoing responsibility. Cumulative or recurring contraventions can present a broader compliance risk, shaping how regulatory bodies view your legal practice.
How Nimblebiz Solutions Can Help
At Nimblebiz Solutions, we specialise in legal trust accounting, providing South Australian law firms with expert guidance and bookkeeping to maintain ongoing compliance, swiftly address corrective action directives, and minimise regulatory interactions.
Let us handle the complexities of trust accounting, so you can focus on what matters most, serving your clients with confidence.