Schedule 1
Lawyers Nominee Company accounting procedure
1. Company name mortgages
2. All transactions through trust account
3. Accounting records
4. Separate trust journal
5. Company name mortgage control account
6. Payment by mortgagors
7. Monthly reconciliation
8. Computerised accounting
1. Company name mortgages
In this appendix, “company name mortgages” means securities for money lent in the name of a lawyers nominee company.
2. All transactions through trust account
All transactions, both principal and interest, relating to company name mortgages are to be recorded in the lawyer’s trust books of account and, together with the relative documents of security and other records, be subject in all matters to the LCA and to the Trust Account Regulations. However, in the case of any mortgage where there is a single mortgagee only, that mortgagee may collect interest direct from the mortgagor.
3. Accounting records
The accounting records to be maintained for company name mortgages are:
(a) mortgage cards, of a distinctive size or colour, in the name of the mortgagor recording clearly:
(i) particulars of the mortgage, including date of maturity, rate of interest, dates interest payable, number of mortgage and title reference
(ii) principal advanced to the mortgagor and repaid by the mortgagor
(iii) interest due by the mortgagor and interest paid
(iv) names of contributors and amounts contributed by each
(v) changes in contributors showing dates, names and amounts
(vi) interest credited to contributors.
(b) a register of clients' investments in company name mortgages recording the investments of each client in each mortgage. (This register may consist of a set of cards.)
(c)
4. Separate trust journal
All trust moneys invested on behalf of clients in company name mortgages and all repayments to clients of those moneys should be recorded by journal entry, as indicated below in a separate trust journal, which should be subdivided in sections for:
(a) advances from clients
(b) repayments to clients (and transfers of interest)
(c) changes in contributors.
(Sectionalising eliminates the need for narrations and facilitates postings to the control account and to mortgage cards and Register of clients' investments.) Thus:
Section 1: Advances
| Authority | ||||
|---|---|---|---|---|
| 1.11.10 | Client A | 25.10.10 | 1,200.00 | |
| Client B | 28.10.10 | 500.00 | ||
| Client C | 14.10.10 | 300.00 | ||
| to Client Z (mortgagor) | - | 2,000.00 | ||
| 30.11.10 | Client D | 10.11.10 | 800.00 | |
| Client E | 10.11.10 | 1,500.00 | ||
| Client F | 10.11.10 | 700.00 | ||
| to Client Y (mortgagor) | 3,000.00 | |||
| 5,000.00 | 5,000.00 |
Section 2: Repayments (and transfer of interest)
| Prin. | Int. | Prin. | Int. | ||
|---|---|---|---|---|---|
| 31.10.10 | Client Z (mortgagor) | 2,000.00 | 60.00 | ||
| to | Client A | 1,200.00 | 36.00 | ||
| Client B | 500.00 | 15.00 | |||
| Client C | 300.00 | 9.00 | |||
| Total | 2,000.00 | 2,000.00 |
Section 3: Changes in contributors
| Authority | |||
|---|---|---|---|
| 30.6.10 | Client G | 25.6.10 | 800.00 |
| to Client D | - | 8000.00 |
5. Company name mortgage control account
In addition to postings each day from the journal (para 4) to the client's trust ledger accounts, at the end of each month the total advances for the month (para 4, Section 1) must be posted to the debit of a company name mortgages control account and the total repayments of principal for the month (para 4, Section 2) must be posted to credit of this account.
6. Payment by mortgagors
(1)
(2) Where payments include principal, the amount received should be credited to the mortgagor's account in the trust ledger and the necessary journal entries completed as in para 4, section 2.
7. Monthly reconciliation
(1) The balance of the company name mortgages control account should be agreed monthly with:
(a)
(2) A clear record of action in accordance with the foregoing should be perused and signed each month by a principal and be suitably filed so as to be readily available for inspection.
8. Computerised accounting
To the extent necessary to integrate with computerised accounting procedures, the procedure outlined may be modified as regards (a) the use of a separate trust journal, (b) the form of mortgage card and of register of clients' investments and (c) posting procedures.