Upcoming due dates

The trust year ended on 31 March 2026, and reporting via LSB Online is now open. Two deadlines are fast approaching:

• Part A: Law Practice Confirmation and Part B: Statement of Trust Money are both due by Thursday 30 April 2026
• EE reports are due by Sunday 31 May 2026.

Important reminders for external examiner reporting

To help you complete your examination, we encourage you to use our EE Checklist. When conducting your examination and completing your EE report, here are some important things to remember: 

Recording breaches

• Make sure you record all breaches and errors that the law practice or approved barrister’s clerk has made for the examination period – regardless of monetary value, the reason for the error or whether the error has already been reported to us.
• If you include your opinion about a breach in Part 4 of your report, it should also be recorded in Schedule 1 – Breaches of Legislation.

Identifying significant risks

Issues that constitute a significant risk include:

• reconciliations that haven’t been prepared at all or have been prepared late – at the very least, you should be reviewing all end of month reconciliations to make sure they’re completed correctly
• deficiencies or irregularities in the trust account records that haven’t been reported
• intermixing of trust money with non-trust money
• controlled money that hasn’t been recorded correctly.

Monitoring dormant balances

• Make sure you monitor dormant balances. Particularly instances where the same ledgers appear across multiple years in circumstances where it should have been cleared and the law practice hasn’t taken steps to complete the matter or clear the balance. These should be listed in Part 6 of your report. The list should include the total number and value of dormant balances, and the age of each dormant balance.
• Law practices must register with the State Revenue Office (SRO) by 31 March each year if they intend to send unclaimed money to the SRO.

Identifying which software accounting system is in use

• Determine which trust accounting system the law practice uses. We encourage law practices to use a system on the approved list of trust accounting software. Excel spreadsheets, Word documents and accounting software such as Xero, MYOB and QuickBooks are not appropriate, and should be identified as a breach in your report.

Carrying out vital checks

• Check with the law practice or approved barrister’s clerk whether they have reported trust deficiencies or irregularities to us during the year. If they have, find out how they responded to or adopted our recommendations, and include this in your report. 
• Review Part A – Law Practice Confirmation and Part B – Statement of Trust Monies to make sure they’re correct, and if they’re not, both forms need to be resubmitted.
• Check that the law practice’s invoices include a notification of client’s rights, and that in all costs-related documents (e.g. costs disclosure and invoices), the law practice is referencing the current legislation (i.e. the Legal Profession Uniform Law). If they’re not, include this in your report.
• Check and report any instances where a law practice has withdrawn invoiced fees prematurely or otherwise not in line with Rule 42 of the Legal Profession General Rules.
• Check and report instances where a law practice includes a Notice of Withdrawal as a blanket statement in the costs disclosure. This notice must be issued with each invoice, and should never be a blanket statement.
• Confirm that the law practice is keeping a backup of trust records in either hard copy or a printable form (i.e. PDF). The law practice can’t rely on the software provider’s cloud storage, and if they are, this should be included as a breach. 
• Check and report any instances where the law practice isn’t complying with their statutory deposit account obligations.

Making final comments

• Do not use the final comments section to report breaches. This section should only include additional information that can’t be reported elsewhere in the report, and shouldn’t be used to note that there are no breaches or that breaches have been recorded in Schedule 1.
• Comments relating to there being ‘no financial loss’ are not relevant to a trust account holding client money. All breaches are to be reported – regardless of whether the law practice or their clients suffer any financial losses, and regardless of whether the law practice rectified the breach. 
• If there have been delays in the law practice giving you records or you have had difficulty communicating with them, please report this in the final comments. If the report has been delayed, reporting the date you had all of the required material from the law practice helps us assess the severity of the delay. 
• Cybersecurity issues at law practices are increasing. If you notice anything concerning, or if a law practice may not be complying with our minimum expectations, please let us know in the final comments, or report it to the Early Detection and Prevention team directly at edp@lsbc.vic.gov.au.
• If you find that a law practice is running a managed investment scheme, mortgage financing or loan business, please let us know in the final comments. We continue to see law practices working in these areas which are high risk for breaching the Uniform Law or other relevant legislation including that overseen by ASIC and we have seen significant consumer harm arising from such schemes. 

Updating contact details

• If a law practice needs to update their address or other contact details, please ask them to do so using our lawyer enquiry form.

Anti-money laundering / counter-terrorism financing obligations

Beginning this year, lawyers will need to comply with anti-money laundering and counter-terrorism financing (AML/CTF) obligations. 

This is because Australia’s AML/CTF framework has expanded to include lawyers (and certain other professions) that are recognised as providing services that are at a high risk of being exploited for money laundering purposes. 

Lawyers who provide specific designated services must enrol with AUSTRAC from 31 March 2026, and comply with AML/CTF obligations from 1 July 2026. These include customer identification and verification, reporting and record-keeping requirements, and developing a tailored AML/CTF program. 

Please check if the law practice is aware of their obligations and has started to put into practice the required changes to their day-to-day activities.

If a law practice need help in understanding their obligations and the timeframes for taking action, please let them know that the LIV has developed a hub for information on AML/CTF obligations for lawyers.

On-site examinations

It's highly recommended that EEs attend the law practice in person at least once during the course of the examination. This should happen even if the law practice is able to provide all of their records digitally.

As we mention in our Canaries in the Coalmine video, EEs are often the first to identify when there are issues with a lawyer’s capacity, or when significant breaches are being hidden, and this can sometimes only be obvious when meeting in person.

In some instances, an onsite visit may be difficult, particularly in remote areas. In these cases, we ask that you make extra efforts to have face-to-face (online or in-person) contact with the lawyer to assess their competency.

External examiner suitability matters

Rule 65A of the Legal Profession Uniform General Rules 2015 (General Rules) gives the Board the power to revoke your eligibility to be an EE. There are broadly two reasons:

1. If you haven’t performed your professional duties as an EE – Rule 65A(2)(a) of the General Rules
2. If you are no longer a competent or suitable person – Rule 65A(2)(b) of the General Rules.  

Factors that can affect whether you are competent or suitable to continue being an EE include:

• not having full mental or legal capacity
• being found guilty of, or being proceeded against, for an offence
• having an adverse finding or having been subject to disciplinary or other civil proceedings relating to your professional conduct
• no longer being qualified to be appointed as an EE because you are no longer a member or hold a public practice certificate with an approved member body.

Disciplinary or civil proceedings include those being actioned by a relevant member body, the Australian Securities and Investments Commission, the Australian Taxation Office, the Tax Practitioners Board, the Companies Auditors Disciplinary Board or any other relevant court or tribunal.

If you are the subject of an investigation or prosecution in relation to your professional conduct and/or serious criminal conduct (for example, charges involving financial crimes and/or fraud), we expect you to notify us as soon as practicable about the investigation and give us updates – including final decisions and determinations. We also expect that you will be responsive to communications from us, and cooperate when we request information. 

Maintaining responsibility for external examinations

We expect that an EE is responsible for carrying out the external examination and completing the report. While we understand that staff can help with collecting and collating some of the information, it is not appropriate for them to do the examination or prepare the report.

We are aware that a number of EEs are assigned to a large volume of law practices. It’s important that these EEs are aware of their primary responsibility to carry out the work themselves as they are the registered EE, not their office.

External examiner survey

We carry out a yearly EE survey because we want to better understand how EEs find the end of trust year examination and reporting process. When you submit your EE report, we will send you a link to this voluntary survey. It includes questions about how you carry out your activities and engage with law practices as an EE.

The survey will take less than 5 minutes to complete and provides us with valuable information on how we can improve our end of trust year activities and communications with you. The survey is open to all EEs in Victoria, and we encourage you to take part.

Risk Outlook 2026

Our Risk Outlook 2026 provides an overview of key risks that we, as the regulator, want the profession to be aware of.

A number of these risks are vital to consider when ensuring trust records are properly maintained – including cybersecurity, mortgage financing, complying with trust account obligations and new AML/CTF obligations.

We encourage you to familiarise yourself with the Risk Outlook, and to recommend your assigned law practices do the same.

Canaries in the Coal Mine video

This video is a must-watch guide to the external examination year. It covers all the important things you need to know before examining a law practice’s trust account records, including:

• why we regulate trust accounts, and the role you play as an EE
• what we expect of you when preparing your report
• how your work supports our risk-based approach to regulation
• a rundown on final trust examinations
• a look at our EE checklist and how it can help you
• which ‘red flags’ to watch out for and when to tell us if there are problems
• which supports are available to help law practices.

We hope this video answers your questions, and we welcome feedback about further guidance that you think would help you when carrying out your examinations. To share your feedback, or to ask us any questions, please use our dedicated EE enquiry form.

Other information

If you have any concerns about a law practice – for example, where a sole practitioner is very ill or otherwise not coping – don’t wait until it’s time to lodge your report to let us know. Please notify us immediately by emailing edp@lsbc.vic.gov.au.

Further guidance

Our website has a wealth of helpful information, including on how to appoint an EE and tips for completing your examination. If you’re unsure about anything, our website should be the first place you look. 

The Law Institute of Victoria (LIV) has a wide range of resources to support law practices. Their trust accounting support and practice management consultancy services are available to all lawyers, not just LIV members. If you think a lawyer needs more support, please remind them of these services. 

You can also contact the LIV’s Marco Zanon with any questions about trust-related matters that aren’t regulatory concerns. He can be reached on (03) 9607 9447 or at trustconsult@liv.asn.au.

Networking with your peers

If you want to communicate with your fellow EEs, we keep a register with contact details that you can download from our website.

Help us find more external examiners

We are looking for more EEs to join our register, particularly in the areas of Victoria that are not well resourced for EEs. If you have a colleague that you think may be interested in becoming qualified, please refer them to the LIV to talk about opportunities to attend the next LIV-facilitated EE course.
 

What to do if you are no longer practising as an external examiner

If you are no longer practising as an EE, please let us know. You can do this by emailing edp@lsbc.vic.gov.au and asking us to remove you from the register.

Cost disputes

The fees you charge as an EE is a contractual arrangement between you and the law practice. It is not our role to try to resolve fee disputes.

Contact us

Our dedicated EE enquiry form makes getting in touch with us easy. You can also upload documents when you submit an enquiry. We recommend using the form when you need our help with:

• registering as an EE
• asking about an interstate accounting firm
• clarifying something in an examination report or end of trust year report
• transferring an EE to a new entity
• telling us if you have changed your address or other details 
• reporting any issues with LSB Online.