All lawyers who handle trust funds for clients or third parties as part of their practice are subject to rigorous trust assurance standards set out in Law Society Rules 3-53 to 3-87.
Every practising lawyer in BC must file an annual trust report. Lawyers who are exempt from insurance and non-practising or retired lawyers who do not handle trust funds are not required to file a trust report. Where there is more than one lawyer at a firm, only one trust report is required for all lawyers of that firm.
If you are a practising insured lawyer but do not maintain a trust account, you still must submit a trust report, but you are only required to complete Section A (Description of Practice) and Schedule 2 (Annual Practice Declaration).
The trust report is designed to be an educational tool to keep your law practice informed of your trust responsibilities.
For many firms, completing a trust report does not require engaging an external accountant. The Law Society, however, has the discretion under Law Society Rule 3-82 to require an accountant’s report in addition to a trust report. This permits the Law Society to continue to require an external review of the accounts of any lawyer that warrants such a review. For example, the Law Society requires an accountant’s report if you:
- have not filed trust reports for the two years immediately preceding the current reporting year
- formerly filed Section A trust reports and now operate a trust account
- terminate your practice during the year and handled or held $5,000 or more in trust funds
- have a history of low compliance that raises concerns about your trust accounting practices
- have had a compliance audit conducted which showed low compliance with the trust accounting rules
You will be notified through the Trust Report Filing Notice if you are required to file an accountant’s report.
The Trust Accounting Handbook explains the Law Society Rules concerning the handling of trust funds and demonstrates step-by-step procedures for accounting of trust funds.
How to file a trust report
The trust report is an online form. At the end of your reporting period, you will be sent your annual filing notice which provides your new filing ID which you will need to access your form. The trust report is due within three months of the end of each reporting period. It is important to file your trust report by the due date to avoid suspension of your membership and late penalties.
If you are required to file an accountant’s report, you will need to engage a qualified external accountant to complete the accountant’s specified procedures section of your report. This accountant must be a qualified CPA, who is permitted to perform audit engagements and must be independent of your firm. You will need to log into your report and complete the lawyer’s sections before the accountant is able to access their section.
If this is your first year of trust reporting, you will be required to file an accountant’s report this year and next year.
If you have filed two or more trust reports with an accountant’s report, the need for further accountant’s reports will depend on the number and nature of the exceptions that are noted by your accountant and other areas of concern to the Law Society.
When I log in with my filing ID, I see last year’s report. You may be using last year’s filing ID. Each year, you will be given a new unique filing ID.