External Examiner Newsletter
In this issue:
- Upcoming deadlines
- Canaries in the Coal Mine 2023
- Updating your details and password
- Introducing a new way to contact us
- Important reminders for EE reporting
- VLSB+C Risk Outlook
- Other useful information
Welcome to your External Examiner (EE) newsletter for 2023.
The trust year ended on 31 March and reporting via LSB Online is now open to law practices, approved barristers’ clerks and EEs. There are two deadlines that are fast approaching:
Part A: Law Practice Confirmation and Part B: Statement of Trust Money are both due by Sunday 30 April 2023.
External Examiner Reports are due by Wednesday 31 May 2023.
We have put together the information below to help you meet these obligations.
Canaries in the Coal Mine 2023
Our Canaries in the Coal Mine 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 EEs;
- what we expect of EEs when preparing reports;
- 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;
- what ‘red flags’ to watch out for and when to notify us of problems; and
- what support is available to assist law practices.
This is our first year trialling a video format for the Canaries in the Coal Mine presentation. We hope it makes accessing the information more convenient for you. Please share with us any feedback, questions or suggestions for additional content we can include in the future.
Updating your details and password
We encourage you to log in to LSB Online using your ID number (A000….) as soon as possible to ensure your details are up to date. When you log in you will be required to change your password and confirm your email address. This is due to recent upgrades to enhance our cybersecurity.
Once you have logged in, select the green button titled ‘Change of Personal Details’. You will also find a list of all the law practices currently assigned to you. You will still need to contact us for any appointments or cessations (see below for more on our new enquiry form).
Introducing a new way to contact us
Getting in touch is easier than ever thanks to our new dedicated enquiry form for external examiners. We recommend using the form when you need our help with any of the following:
- registering as an external examiner
- asking about an interstate accounting firm
- clarifying something on an examination report or end-of-trust-year report
- transferring an external examiner to a new entity
- notifying us of a change of your address or other details
- reporting issues with LSB Online
- other questions or feedback.
You can also upload documents when you submit an enquiry. We created the form to streamline how we handle requests, so try it out next time you have one.
Important reminders for EE reporting
With the examination period upon us, here are some things to remember when preparing your reports:
- Please make sure you record all breaches or errors made by a law practice or approved barristers’ clerk, including:
- Reconciliations not prepared – this constitutes an extreme risk;
- Failures to prepare up-to-date reconciliations;
- All deficiencies/irregularities in the trust account records;
- Intermixing of trust money and non-trust money;
- Controlled money that is not being titled correctly;
- Failures to issue statements at 30 June;
- Funds being drawn prematurely; and
- Reconciliations not being checked to bank statement balance.
- Do not put breaches in the final comments.
- Cross-check trust deficiencies/irregularities against responses in Part B: Statement of Trust Monies.
- Check with your law practice whether they have reported trust deficiencies/irregularities to us during the year. If so, clarify how they have responded to or adopted our recommendations.
As you conduct your visits, also bear in mind the following:
- A cheque book breach is only relevant when the cheque has been drawn, not when it is sitting in the draw.
- We do not require a copy of the Assurance Report. All issues and breaches must be included in the EE report.
- You do not need to sight copies of bank statements. We download these transactions every day directly from the bank.
- You do not need to sight the practising certificate of the principal lawyer(s).
- If there is a mistake on Part A: Law Practice Confirmation or Part B: Statement of Trust Monies then these forms must be restarted.
- If Part B or the EE report is not allowing you to change the categories of trust money to make your opinion, then Part B will need to be resubmitted by the law practice. Our experience is that this is usually caused by a lack of understanding by the law practice about how to classify or describe the trust money that they deal with.
- Comments relating to ‘no financial loss’ are not relevant to a trust account holding client money.
- Though their use is encouraged, digital accounting systems do not have to be on the approved list of trust accounting software. However, Excel spreadsheets and Word documents are not appropriate and should not be used.
- If a law practice needs to update their address or other contact details, please advise them to use our lawyer enquiry form
VLSB+C Risk Outlook
We launched our first ever Risk Outlook to the profession last month, highlighting our top five areas of regulatory focus for the year ahead. These are:
- Costs disclosure non-compliance
- Non-compliance with trust money obligations
- Unethical conduct
- Inadequate supervision and oversight.
The Risk Outlook describes the issues and conduct associated with each risk, and explains how we plan to respond. It also includes tips to help lawyers avoid risky behaviour.
We strongly encourage you to share the Risk Outlook with the law practices you work with this year, particularly as it emphasises the importance of complying with trust money requirements.
Other useful information
If you have any concerns about a law practice, for example, where a sole practitioner is very ill or otherwise not coping, please don’t wait until it is time to make your report – contact us immediately at firstname.lastname@example.org.
Our website is packed with helpful information, including how to appoint an EE and tips for completing an external examination. If you are unsure about anything it is a good place to start.
The LIV has developed 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. Please remind lawyers of these services if you think they can help. You can also contact Marco Zanon at the LIV about any trust-related matters that are not regulatory concerns:
P: (03) 9607 9447
If you want to communicate with your fellow EEs, we maintain a register with contact details you can download from our website.