Compliance Audit FAQs

Audits are randomly selected with the overall goal to audit each firm at least once within a 4- year or 6-year cycle, depending on the firm’s area of practice. However, we may audit a firm more than once in a cycle in certain instances. Some examples include:

• the failure to file a trust report or file a trust report in a timely manner;
• information on a trust report that indicates non-compliance with the trust accounting rules;
• a referral from another department of the Law Society; and
• deficiencies that were identified during a previous compliance audit that require follow up.

Firms that do not maintain trust accounts are still required to maintain books, records and accounts that comply with the provisions of the Legal Profession Act, the Law Society Rules and the BC Code.

Filing a trust report is an annual reporting requirement independent from a compliance audit. As such, the review periods of the trust report and compliance audit may coincide. The trust report does not replace a compliance audit, or vice versa. There are two types of trust reports:

• Self-Report, which is completed entirely by the firm; and
• Accountant’s Report, which requires the firm to engage an independent and qualified CPA to complete Section C of the report.

Where there is a scheduling conflict, the responsible lawyer must contact us to request a reschedule of the audit within one week of receipt of the introduction letter. The audit cannot be postponed longer than two months and cannot be cancelled. We require the client trust ledgers from the audit period start date to the date of our letter and the most recent reconciliation of the main pooled trust account in order to consider the reschedule request.

We strive for minimal disruptions to the firm and try to accommodate the lawyer’s schedule. The responsible lawyer needs to be available for the interview meeting and to answer the auditor’s queries periodically throughout the audit. If we are conducting the audit remotely, we will conduct most communication via email or TitanFile.

In most cases, we will require the contact information of the individual responsible for preparing the books and records to answer applicable questions.

The Law Society has vetted TitanFile to be a secure platform to upload documents and exchange correspondence. Communication via TitanFile is recommended, but not mandatory.

The compliance audit will be conducted at the Law Society office in Vancouver. If there are special circumstances preventing the audit from being conducted remotely, please contact us immediately.

If it has been determined that the compliance audit will be conducted at the firm’s office, the auditor must be provided with a suitable workstation. At minimum, the auditor requires a quiet location with a desk, comfortable chair, and access to an electrical outlet to plug in a laptop. An area in reception or the reception desk is not a suitable location. The auditors are unable to attend the lawyer's residence or home office.

Our letter provides a table listing records required to complete the audit, along with the applicable due dates.

The client trust ledgers and trust reconciliation must be emailed to complianceaudit@lsbc.org.

If the audit will be conducted at the firm’s office, the books and records listed on the Compliance Audit Books & Records Checklist must be assembled, labelled and available for review upon the arrival of the auditor.

If the audit will be conducted remotely, use one or both of following option(s) to deliver the records listed on the Checklist:

1. Upload electronic records via TitanFile using the link provided in our email. In your email inbox, you would have received a separate TitanFile notification email. Click the “Access Files” button to create a new free TitanFile account or to log in to your existing TitanFile account.
2. Deliver records to our office at 845 Cambie Street, Vancouver. The records can be delivered either in paper form and/or on an encrypted USB drive, to the attention of the Trust Assurance department. Ensure to include the name and contact information of the law firm, as well as the file number indicated in the subject line of our introduction letter. At completion of the audit, we will advise you when your records are ready to be picked up.

Client trust ledgers generated from an accounting software should be provided in both PDF and Excel format. All client trust ledgers for the audit period must be provided, including archived and inactive ledgers, generated on one report. All other reports, including the monthly trust reconciliations, should be provided in PDF.

No, the auditor will not be accessing the accounting records through the firm’s computer system. We ask that the firm provide electronic copies or paper copies of the requested accounting records and client files.

Yes. The auditor will request a sample of approximately five to ten client files to review. Please provide the complete client file, client identification and verification records, and the client trust ledger since inception for each selected file. If you have questions about the contents of the client files, please discuss this with your auditor. Section 88 of the Legal Profession Act preserves the confidentiality or privilege that may be contained in any documents provided to the auditor.

If the compliance audit is completed remotely, an auditor will contact the firm to advise they have started the compliance audit and to arrange for an interview with the lawyer responsible for the accounting records. If the compliance audit is completed onsite, the auditor will interview the responsible lawyer during the audit, usually on the first day. The interview assists the auditor to understand the firm’s processes and procedures. The responsible lawyer may wish to have the firm’s bookkeeper attend the interview.

Our goal is to complete the audit within 1 to 2 months of receiving the books and records on the Checklist. However, the duration may vary and is dependent on the complexity of the areas of practice, the timeliness of receiving records and explanations, and the auditor’s schedule.

Yes, at the conclusion of the audit we will deliver a Compliance Audit Summary Report and discuss the audit findings as described in the report. We will follow up with a letter providing additional resources. The letter may ask for a written response with information and/or confirmation that the firm has implemented appropriate measures to ensure compliance with specific rules. If the deficiencies in the trust accounting records are serious, we may arrange a subsequent audit to assess whether the firm has carried out the corrective actions required to ensure compliance.

Yes, a trust report is required every 12 months, regardless of the timing of the compliance audit. A filing notice with instructions will be sent to the firm 3 months before the trust report is due. The filing notice will advise whether the firm is required to file a Self-Report or an Accountant’s Report for that reporting period.