Of the nearly 2000 reports lodged this year, 63% showed minor or no trust accounting breaches, while the remaining 37%, (750 reports) identified more serious issues. This latter figure grew by 3% on last year’s total, which we attribute to both an increase in the number of reports lodged, and to improvements in the quality of reporting as we continued to evolve our reporting systems.
To assist you in preparing their reports, we made changes to the reporting questions in LSB Online and improved our explanatory notes. We also hosted a seminar (Canaries in the Coal Mine) to reinforce the valuable role that you have in regulating trust accounts and identifying trust account issues early.
We followed up on all reports where more serious issues were identified. Examples of the actions we took to address serious issues includes:
- seven full investigations carried out for practices where very serious concerns were identified;
- three cases where restrictions on the law practice principal’s practising certificate were considered;
- around 100 visits to practices where reports indicated a medium level of risk (a lower number than in previous years);
- 150 desktop audits completed by firms for less serious issues; and
- ten cases where we recommended the lawyers engage a bookkeeper.
Below is an overview of the types of breaches you have identified in you reports over the past five years.
|General trust accounting breach||29||22||25||21||5|
|Controlled money breach||17||17||45||N/A*||N/A*|
|Deficiencies in a trust ledger||257||151||228||183||11|
|Unrestored deficiency at the end of the year||35||38||48||56||N/A*|
|Some interesting statistics|
|Principal is sole executor of an estate||553||582||569||253||214|
|Practices keeping manual records||27%||28%||33%||N/A*||N/A*|
* Information was not collected in previous years