Changes to the Legal Profession Regulation
Our director James Kenward attended a training course held at the Institute of Public Accountants last month aimed at external examiners. There are some changes to LPR2017 which commenced in September 2017 and will be applicable to the upcoming March 2018 trust account year-end examinations.
These were the key points flagged by Bill Hourigan, Manager, Trust Account Investigations, within the Professional Leadership Department of the Queensland Law Society.
S.29(1) Keeping and printing trust records
Reconciliations and other documents can now be printed to pdf or be scanned and kept in a ‘printable’ format. A critical issue to consider here is that it must be clear when the document was produced to demonstrate that it was prepared within 15 working days of the month end.
S.44(3) Reconciliation of trust records
QLS had the view that principals were failing to follow up reconciliation differences, as a result, there is now a requirement for the principal to annotate the reconciliations to evidence their review.
S.50(2) Withdrawal of controlled money
The new regulation states withdrawals from controlled money can only be by cheque or electronic funds transfer (EFT guidelines would apply). Bill indicated this was a ‘touch up’. This means that payments from controlled money cannot be made via cash withdrawals, ATM withdrawals or transfers, telephone banking withdrawals, BPAY Payments or direct debit (OSR/PEXA excluded).
S.51(9) Register of controlled money
Monthly reconciliations of controlled money are to be reviewed by the principal & annotated as such.
S.55(2)(g) Register of investments
The register must contain ‘particulars sufficient to identify the source of the investment’. Bill felt the old regulation which gave some examples of what these particulars might be was confusing. The new trust accounting guide is still not clear on this in my view, it appears QLS will accept a reference to the date of the original written direction to invest as adequate.
S.57(2) Register of powers and estates in relation to trust money
This brings in an exemption to keep a register of powers and estates in the case where the law practice must act jointly with one or more persons who are not associates of the law practice
S.58 Procedures and requirements for withdrawing trust money for legal costs
In an aim to make things clearer in an area where law practices were often non-compliant, this section is now split into three areas applying where a bill has been issued, a cost agreement or payment authority is in place and for disbursements.
There was also discussion about recent email scams and the importance to be 100% certain bank details are genuine when making EFT payments based on information emailed to the practice. Bill was aware of 5 practices that had paid out a total of $800K due to these frauds. His advice to the practices was to notify the police, notify the client & make good the shortfall in trust monies.
There were some interesting statistics on the lodgment of Examiners reports for 2017 which were due by the end of May. From a total of 2300 reports expected, only 300 were lodged on time, a further 1200 came in by 5th June and a total of around 1700 by the end of June.
To find out more about the changes to the regulation and how they might affect your business give the team from SAAS Audit a call today.