Trust assurance in action
Timothy E. McGee
One of the cornerstones of the Law Society's new Trust Assurance Program — launched in 2007 and now in full operation — is the use of comprehensive in-field compliance auditing to complement annual on-line trust reporting. I would like to share with you some early observations and feedback which I think bode well for the future success of the program.
Our compliance audit teams have now completed in-field audits of more than 280 firms throughout the province. The audit teams will visit each BC law firm at least once every six years. So far each audit is typically taking 3 days to complete and the cooperation from the firms visited has been excellent. As much as possible the audit team coordinates its visit with the firm to minimize disruption. For example, firm principals need not clear their schedules during the audit; in most cases they are asked to be available to the audit team for an hour at the beginning and again at the close of the audit.
Feedback received to date indicates that law firms generally perceive the audit teams as being helpful and supporting their compliance with the trust accounting rules — an important goal of the Trust Assurance Program. Suggestions from firms which will be pursued include publishing a list of frequently asked questions drawn from the audits and designing a course for bookkeepers covering best practices for trust accounting compliance.
To date the vast majority of the audits are not raising serious compliance issues. Two of the most common problems involve technical breaches of the "no-cash" rule (Rule 3-51.1(3), which prohibits lawyers from receiving $7,500 or more in cash in any single client matter or transaction, subject to specific exceptions set out in subrule (2)) and the "unauthorized trust account signatory rule" (Rule 3-56 (2)(c), which prohibits the issuing of trust cheques without the signature of a practising member).
A key goal of the Trust Assurance Program is to ensure that all firms scrupulously follow the Society's rules for receipt and handling of trust funds. The Benchers have adopted key performance measures for the program, which include a higher percentage of compliant trust report filings each year and long term reductions in the number of financial suspensions and referrals to the Professional Conduct department. While it is too early to assess results on these measures, the initial indicators suggest that the in-field compliance audit component of the program is off to a good start.
Another goal of the program is to eliminate the need for most firms to file an accountant's report with their trust returns: this has been the case for over 92 per cent of the 3,300 returns filed to date.
If you or your firm have any feedback or comments about the Trust Assurance Program that you would like to share with the Law Society, please contact Felicia Ciolfitto, Manager, Trust Assurance at 604-605-5356 or firstname.lastname@example.org.