Trust Account Audit Requirements: Who Qualifies and What You Get

This scheme outlines the mandatory rules for lawyers who handle money on behalf of their clients. It ensures that all client funds are managed according to professional standards and regulatory expectations.

👤Who it's for

This requirement applies to all lawyers who handle client funds. If your legal practice involves managing, receiving, or holding money that belongs to your clients, you fall under these regulations. It is an essential obligation for maintaining a practicing certificate and ensuring professional accountability.

🎁What you get

By following these rules, you achieve regulatory compliance for your trust accounting. This process provides a formal verification that client money is being handled correctly, protecting both the lawyer and the client. It serves as a structured way to meet the professional obligations required to maintain your status as a practicing lawyer.

💰What it costs you

There is a financial cost associated with this requirement. You must pay an annual audit fee to an independent auditor who is tasked with reviewing your records. This cost is necessary to facilitate the mandatory external review of your trust accounts.

⚠️The catch to know

You must maintain extremely high standards of accuracy in your record-keeping. A common pitfall is that even minor discrepancies found within your reconciliation reports—which are the documents used to ensure your records match your bank balances—can lead to mandatory inspections. These inspections are triggered to ensure that any errors are identified and corrected immediately.

📝How to apply

1. Maintain accurate and up-to-date trust accounting records for all client funds.
2. Prepare your reconciliation reports to ensure all balances are correct.
3. Engage an independent auditor to conduct the required annual review.
4. Pay the annual audit fee to the auditor.
5. Ensure all audit outcomes are submitted as required by the New Zealand Law Society.