Trust Account Guidelines
The NZLS Board approved these guidelines on Thursday 6 November 2008. The guidelines are also available as a PDF file.
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Introduction
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Definitions
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Trust accounts
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Trust account records
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Receiving trust money
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Payments from trust money
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Reconciliations
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Reporting requirements
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Interest Bearing Deposit Accounts
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Miscellaneous matters
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Internal controls in a law practice
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Internal control issues for Trust Account Supervisors
APPENDIX A
APPENDIX B
APPENDIX C
1. Introduction
1.1 The NZLS has issued these guidelines to assist lawyers with providing a system for handling client money and valuable property, and for administering trust accounts in law practices. The system is relatively simple and is designed for use by lawyers or their accounting staff. Although these guidelines are not mandatory, compliance with them will generally ensure compliance with the trust account provisions of the Lawyers and Conveyancers Act 2006 (“the Act”) and the Lawyers and Conveyancers Act (Trust Account) Regulations 2008 (“the Regulations”). Lawyers and others are welcome to contact the Law Society with suggestions for improving these guidelines.
1.2 Other trust accounting systems may also comply with the Act and the Regulations. Lawyers who use alternative systems must take care to ensure that the procedures they have adopted comply. Where your trust accounting system departs from these guidelines, we recommend that you clearly document the differences and justify the reasons for them.
1.3 The guidelines give practical information in relation to the following matters:
- the difference between a trust account and trust account records
- the records required to operate a trust account
- procedures to follow when you receive trust money
- procedures to follow when you pay trust money
- reconciliation of trust account records
- reporting requirements
- Interest Bearing Deposit Accounts
- miscellaneous matters, including lawyers’ trustee companies, withholding tax and attorneys for sole practices
- accounting control systems, security and retention of records
- issues of particular concern to Trust Account Supervisors.
1.4 The guidelines also provide a number of sample forms and registers as appendices.
1.5 The procedures suggested in these guidelines are based on a simple manual system of trust accounting. Clearly many lawyers prefer to use computerised trust accounting systems. However, there are two good reasons for basing the guidelines around a manual system.
First, some lawyers still have manual systems. Many of these practices do not employ a specialist trust accountant and they are therefore most in need of detailed guidelines.
Second, the principles of trust accounting are the same whether the system you use is manual or computerised. Any accounting software package should incorporate all the features set out in these guidelines. The guidelines are therefore relevant to both manual and computerised systems. Where a system is computerised, methods will be adapted to the system but the requirements will be generally unchanged.