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Rules of Practice 1994 (S.R. 1994, No. 229)
Requested:  29 Mar 2017
Consolidated as at:  17 Mar 2006

PART 3 - Accounting rules

Division 1 - Receipts

17. Receipt books

(1) A firm must maintain a separate receipt book for each trust bank account established and maintained by it.
(2) A trust bank account receipt book is to be clearly identified as a trust bank account receipt book.

18. Receipts

(1) A firm must ensure that a receipt is written for any trust money received by it for or on behalf of a client.
(2) A receipt of trust money is to contain the following:

(a) the date of issue of the receipt and the date of receipt of the money, if different;

(b) the amount of money received;

(c) the form in which the money was received;

(d) the name of the person from whom the money was received;

(e) the name of the person on whose behalf the money was received;

(f) clear identification of the ledger account to be credited;

(g) the description of the matter;

(h) the purpose for which the money was received;

(i) the signature of the person who issued the receipt or the name of the firm.

19. Numbering and identification of receipts

A firm must ensure that receipts –

(a) are consecutively numbered; and

(b) identified as trust bank account receipts.

20. Duplicate receipts

A firm must issue a duplicate receipt if the details contained on the receipt are not entered into the cash book when the receipt is issued.

Division 2 - Payments

21. Payment of trust money

(1) A firm must not make a cash payment of trust money without the written authority of the client.
(2) A firm must keep any written authority received by it.

22. Cheques

A cheque for the payment of trust money is to –

(a) be crossed "Not Negotiable"; and

(b) be issued payable to order or bearer; and

(c) record the name of the firm; and

(d) record the words "Trust Account" on the cheque; and

(e) be signed by a principal of the firm or an approved person.

23. Cheque butts

A firm must –

(a) keep a cheque butt as a record of each payment of trust money; or

(b) keep cheque requisitions or some other record of each payment of trust money; or

(c) enter details of the payment of trust money into the cash book when the cheque is issued.

24. Details of cheque butts

A firm must ensure that the following details are recorded on each cheque butt, cheque requisition or other record of payment of trust money in respect of each payment from a trust bank account:

(a) the number of the cheque;

(b) the date of the cheque;

(c) the amount of the cheque;

(d) the name of the payee;

(e) details clearly identifying the trust ledger account to be debited;

(f) the description of the matter;

(g) details of the purpose for which the payment was made.

25. Details of cheque requisitions

If a firm keeps cheque requisitions or some other record of each payment of trust money instead of cheque butts, the firm must –

(a) record the relevant cheque number on that requisition or record; and

(b) store the requisitions or records in numerical order.

Division 3 - Cash books and bank deposit books

26. Trust account cash book

A firm must maintain a separate trust account cash book in respect of each trust bank account established and maintained by it.

27. Receipts

(1) A firm must ensure that the following details are recorded in the cash book in respect of each receipt:

(a) the date of issue of the receipt and the date of receipt of money received, if different;

(b) the amount of money received;

(c) the form in which the money was received;

(d) the name of the person from whom the money was received;

(e) the name of the person on whose behalf the money was received;

(f) clear identification of the trust ledger account to be credited;

(g) the description of the matter;

(h) the purpose for which the money was received;

(i) the date and amount of each deposit to the trust bank account.

(2) Details of receipts are to be recorded in the receipts part of the cash book –

(a) in the order in which they are issued; and

(b) within 7 days of the issue of the receipt.

28. Payments

(1) A firm must ensure that the following details are recorded in the cash book in respect of each payment:

(a) the date the payment was made;

(b) the amount of the payment;

(c) the name of the payee;

(d) clear identification of the trust ledger account to be debited;

(e) the description of the matter;

(f) the purpose for which the payment was made.

(2) Details of payments are to be recorded in the payments part of the cash book –

(a) in the order in which the cheques are issued; and

(b) within 7 days of the issue of the cheque.

(3) A firm, on becoming aware of a direct credit to its trust bank account, must write a receipt for that payment containing the following particulars:

(a) the date of the receipt;

(b) the amount of the payment;

(c) the name of the client in respect of whom the payment is made;

(d) the words "direct credit" or similar;

(e) any other particulars that may assist in identifying the transaction.

29. Trust bank deposit books

A firm must maintain a trust bank deposit book in duplicate for each trust bank account established and maintained by it.

Division 4 - Trust ledger account

30. Trust ledger account

(1) A firm must maintain a separate trust ledger account for each client's matter for which it receives trust money.
(2) A firm must record receipts, payments and journal transfers in the trust ledger account –

(a) in the order in which they are issued; and

(b) within 7 days of issue.

31. Details of trust ledger account

A firm must ensure that the following details are recorded for each trust ledger account:

(a) the name of the person on whose behalf the money is held;

(b) that person's address;

(c) clear identification of the matter.

32. Receipts

A firm must ensure that the following details are recorded in the trust ledger account in respect of each receipt:

(a) the date the receipt was issued and the date the money was received, if different;

(b) the amount of money received;

(c) the name of the person from whom the money was received;

(d) the purpose for which the money was received.

33. Payments

A firm must ensure that the following details are recorded in the trust ledger account in respect of each payment:

(a) the date the payment was made;

(b) the amount of the payment;

(c) the name of the payee;

(d) details of the purpose for which the payment was made.

Division 5 - Journals

34. Transfer journal

(1) A firm must maintain a journal which contains the following details in respect of each transfer:

(a) the date of the transfer;

(b) the trust ledger account from which the money is transferred;

(c) the trust ledger account to which the money is transferred;

(d) the amount transferred;

(e) the purpose of the transfer.

(2) Transfer journal entries are to be maintained –

(a) in proper sequence; and

(b) in a secure manner.

Division 6 - Bank statements

35. Trust bank account bank statements

A firm must keep every bank statement for each trust bank account established and maintained by it.

Division 7 - Reconciliations

36. Reconciliation of trust records

A firm, within 10 days of the end of each month, must –

(a) balance the cash book; and

(b) reconcile the bank statement balance to the cash book balance; and

(c) reconcile the list of trust ledger account balances to the cash book balances; and

(d) record details of those balances and reconciliations as a permanent record.

Division 8 - Withdrawals from and payments to trust bank account

37. Withdrawal of money

(1) A firm must not withdraw money from a trust bank account for or on behalf of a client unless –

(a) money amounting to at least the amount withdrawn is held in that account at the time of that withdrawal –

(i) in the trust bank account to the credit of that client; or

(ii) in the possession of the firm for payment into the trust bank account to the credit of that client; or

(iii) in the trust bank account identifiable by details recorded in the trust ledger account as being money to which that client is entitled; or

(b) that withdrawal arises from the debiting of a cheque which has been properly used to obtain a bank cheque on behalf of that client while that bank cheque remains in the possession of the firm pending its proper disposition.

(2) A firm must not retain a bank cheque drawn under subrule (1) for a period exceeding 2 banking days.

38. Receipt of money

A firm receiving money that is to be paid into that firm's trust bank account in accordance with section 101 of the Act must –

(a) record details of that money in the trust ledger account; and

(b) pay that money into the trust bank account before the end of the next banking day.

39. Payment of costs and expenses

A firm may –

(a) withdraw from the trust bank account any money held in the trust bank account for or on behalf of a client, if the withdrawal does not cause a debit balance in that client's account in the firm's trust ledger account; and

(b) apply that money to its own use, either –

(i) in payment of any costs owing to the firm by a client; or

(ii) in reimbursement of any out of pocket expenses incurred by the firm on behalf of a client.

40. Limit on withdrawal of money

(1) A firm must not withdraw any money in excess of $100 from a client's account in the trust ledger account except –

(a) with an authorization in writing from the client; or

(b) in accordance with an account, bill of costs, letter, statement or memorandum posted to the client within a reasonable time to the client's last known address.

(2) A copy of every account, bill of costs, letter, statement or memorandum referred to in subrule (1) must be kept by the firm for at least 2 years.
(3) Subrule (1) does not apply to money received by a firm for costs.

Division 9 - Money in transit

41. Money in transit

A firm that receives money from another person with instructions to pay or endorse and deliver it to a third person must comply with those instructions –

(a) before the end of the next banking day or as soon as practicable after the next banking day; or

(b) no later than the day authorized by the person from whom the money was received, if that day is later than the next banking day.

42. Money in transit ledger

(1) A firm must maintain a ledger in respect of money to which rule 41 applies.
(2) A firm must ensure that the following details are recorded in a ledger within 7 days of the receipt of the money:

(a) the name of the person from whom the money was received;

(ab) the name of the person on whose behalf the money was received;

(b) the amount of money received;

(c) the form in which the money was received;

(d) the date of receipt of the money;

(e) the name of the person to whom the money is to be paid or endorsed and delivered;

(f) the day on which the money is to be paid or endorsed and delivered, if it is later than the next banking day;

(g) the word "paid", when that money is paid or endorsed and delivered.

(3) A firm must provide a statement of account in respect of each ledger to the person on whose behalf the money was received –

(a) within 28 days of receipt of the money; or

(b) if it is unreasonable or inappropriate to do so within that period, as soon as practicable.

Division 10 - Computer accounting systems

43. Computer accounting systems

(1) A firm may maintain its trust bank account records on a computer system.
(2) A firm that maintains a computer accounting system must maintain a record in chronological order of all changes to the following details:

(a) name of the client;

(b) address of the client;

(c) number of the client;

(d) number of the matter;

(e) description of the matter;

(f) trust bank account number.

44. Journals maintained on a computer system

A firm must ensure that in respect of any journal maintained on a computer system –

(a) entries balance before new entries are made to the trust ledger account; and

(b) any journal reference numbers are allocated in sequence.

45. Trust ledger account maintained on a computer system

A firm must ensure that in respect of any trust ledger account maintained on a computer system –

(a) a programme is not able to accept the entry of a transaction resulting in a debit balance to an account unless a contemporaneous record of that transaction and of all subsequent transactions by which the debit balance is increased, reduced or remedied is made in a manner which produces in a permanent and legible form a separate chronological report of all the transactions that may be made; and

(b) a programme is not able to delete an account unless –

(i) the balance of the account is zero; and

(ii) if deleted, the account is retained in visible form.

46. Manner of keeping records on a computer system

A firm must ensure that –

(a) an entry in a record produced in a visible form is in chronological order and a copy is kept on the file relating to that record; and

(b) a report and each entry or page in a report is numbered sequentially in a manner which allows the completeness of the records to be verified; and

(c) particulars of a recorded transaction are not able to be amended except by a separate transaction effecting the amendment; and

(d) a back-up copy of all records is made at least once each month; and

(e) the most recent back-up copy is kept at separate premises or in a fireproof location on the firm's premises.

Division 11 - Trust account inspectors

47. Appointment of trust account inspectors

(1) The Council, by instrument, may appoint one or more trust account inspectors.
(2) An instrument is to be signed by 2 members of the Council.
(3) A person may not be appointed as a trust account inspector unless he or she –

(a) is a member of the Institute of Chartered Accountants; or

(b) is a member of the Australian Society of Certified Practising Accountants; or

(c) holds an approved qualification.

48. Assistant trust account inspector

A trust account inspector, with the approval of the Council, may appoint an assistant.

49. Bank accounts

A legal practitioner is to supply to the trust account inspector particulars of each bank account maintained or operated by that legal practitioner in respect of his or her practice during the accounting period.

50. Examinations

(1) A trust account inspector is to carry out an examination, at least once in every 12 month period, of each legal practitioner who holds a practising certificate.
(2) An examination is to consist of the following:

(a) an examination of the book-keeping system in each place of business of the legal practitioner to determine whether or not the system complies with the requirements of this Part;

(b) a check of a sample of postings to each trust ledger from records of receipts and payments of clients' money;

(c) a check of the arithmetical accuracy of those records;

(d) a comparison of a sample of lodgements into, and payments from, the trust account, as shown in bank statements, with the records of receipts and payments of clients' money;

(e) a check of the system of recording costs and making withdrawals in respect of costs from the trust account;

(f) a sample of transactions recorded in each trust ledger during the accounting period in order to ascertain –

(i) whether the entries relating to those transactions are in accordance with the rights of each client as those rights appear to the trust account inspector from the documents held by the legal practitioner; and

(ii) whether the accounting has been carried out in accordance with this Part;

(g) a check of the extraction of balances of the trust ledger accounts at any one date during the accounting period including –

(i) a check of the additions of the extraction of balances; and

(ii) a check of the reconciliation of the total of the balance with the balance shown in the bank statement; and

(iii) a check that any amount shown in the reconciliation as being money in hand was promptly deposited; and

(iv) direct confirmation with the bank concerned of the accuracy of the bank balance used in the reconciliation;

(h) a check that, as at the date chosen for the check of the extraction of balances and the check of the reconciliation, the total of any debit balances in the trust ledger account was covered in accordance with rule 37;

(i) a check of some money taken to the credit of the office account of the legal practitioner to ascertain that the credit was not money which should have been credited to a client's trust account;

(j) an inquiry into the amount on deposit with the Trust.

(3) A trust account inspector may carry out an approved inspection of a legal practitioner's affairs if the inspection relates to the operation of that legal practitioner's trust bank account.
(4) The Council may fix and impose a scale of fees for an examination.
(5) A trust account inspector may carry out an examination in the presence of a legal practitioner appointed by the Council under subrule (6).
(6) The Council may appoint a legal practitioner to be present at an examination.

51. Documents for examination

(1) A trust account inspector may require a legal practitioner to produce for examination the following documents held by the legal practitioner on behalf of a client:

(a) stocks or shares;

(b) mortgages or other securities;

(c) titles;

(d) any other documents.

(2) A legal practitioner is to comply with a requirement made under subrule (1).
(3) A legal practitioner complies with a requirement made under subrule (1) in respect of a title or mortgage if he or she produces for inspection a receipt or other documentary evidence that the title or mortgage has been produced for the purpose of the Land Titles Act 1980.

52. Report to Council

(1) A trust account inspector is to report to the Council if, in the course of examining a legal practitioner's accounting records and other relevant documents, the trust account inspector –

(a) finds those records to be in disorder at any time during the accounting period; or

(b) considers that there should be a closer examination of the records; or

(c) has reasonable grounds to suspect that –

(i) there is irregularity in the accounts; or

(ii) the legal practitioner has failed to keep the accounts in accordance with this Part.

(2) A trust account inspector may make any further examination necessary to complete a report if of the opinion that a legal practitioner has not complied with this Part.
(3) A further examination is not limited to the accounting records for the accounting period.

53. Letters to clients

(1) A trust account inspector, at the time of making an examination, may require the legal practitioner whose accounting records are under examination to deliver certain letters to the inspector.
(2) The letters are to –

(a) be in an approved form; and

(b) be written on the business paper or letterhead of the legal practitioner; and

(c) be signed by the legal practitioner; and

(d) be addressed to those clients specified by the inspector.

(3) Subject to subrule (4), the number of letters required to be provided by the legal practitioner is not to exceed 10% of the number of clients of the legal practitioner who are involved in money for investment or securities.
(4) The number of letters may exceed 10% of the clients of the legal practitioner, if –

(a) the legal practitioner consents; or

(b) the Council approves.

(5) A legal practitioner must comply with a requirement made under subrule (1).

54. Privilege

(1) A legal practitioner has the right on the ground of privilege to refuse to produce any document to a trust account inspector engaged in an examination.
(2) If a legal practitioner refuses to produce any document on the ground of privilege, the legal practitioner is to report to the Council in writing the circumstances of the privilege.

55. Production of documents

(1) The Council, at any time, may require a legal practitioner to produce to a person appointed by the Council for that purpose any of the following documents kept by the legal practitioner to record costs and expenses:

(a) accounting records;

(b) documents relating to the entries in those records;

(c) copy receipts;

(d) cheque butts;

(e) bank statements.

(2) The Council is to notify the legal practitioner of –

(a) the time and place at which the documents are to be produced; and

(b) the person to whom the legal practitioner is to produce the documents.

56. Obstructing a trust account inspector

(1) A practitioner must not obstruct or delay a trust account inspector, an assistant trust account inspector or a legal practitioner appointed by the Council under rule 50(6) in the exercise of any functions.
(2) A practitioner who contravenes subrule (1) is guilty of professional misconduct.

57. Unauthorized disclosure

(1) Subject to subrule (2), a trust account inspector, an assistant trust account inspector or a legal practitioner appointed by the Council under rule 50(6) must not make an unauthorized disclosure of –

(a) any matter that comes to their notice in the course of an examination; or

(b) anything contained in a report.

(2) A trust account inspector may disclose any matter –

(a) to an assistant; or

(b) to a legal practitioner appointed by the Council under rule 50(6); or

(c) in a report.

(3) A member of the Council, employee of the Society or legal practitioner must not make an unauthorized disclosure of anything in a report.
(4) In this rule,
unauthorized disclosure means a disclosure to a person other than –

(a) the Attorney-General; or

(b) a member of the Council; or

(c) a person authorized by the Council; or

(d) an employee of the Society; or

(e) a legal practitioner appointed by the Council under rule 50(6); or

(f) the Supreme Court.

Division 12 - Miscellaneous

58. Maintenance of accounting records

A firm must keep each book of account or accounting record required to be maintained under this Part –

(a) in good order and condition; and

(b) for a period of not less than 10 years after the date of the last entry in that book or record.

59. Exemptions

(1) A firm may apply to the Council for an exemption from the provisions of this Part.
(2) The Council may –

(a) grant the exemption with or without conditions; or

(b) refuse to grant the exemption.

(3) An application is to be –

(a) in writing; and

(b) lodged with the Executive Director.

(4) The Council may revoke an exemption at any time.


CURRENT VIEW: 31 Dec 1994 - 1 Oct 2016
VIEW THE AS MADE VERSION