Accurate Legal Accounting Reports
In the third post of our 4 post series on surviving the legal audit minefield we will be taking a look at the legal accounting reports that could help your survive a legal accounting audit. If you haven’t read our first two posts
A legal accounting audit almost always begins with the auditor asking for a set of reports. Hopefully this is where the audit ends as well. If your firm’s reports are both comprehensive and accurate the auditor will simply test a few transactions and be on their way. When reports appear to be to be incomplete or inaccurate the auditor will be looking for individual transaction data and access to your manual system or legal accounting software. This is where the nightmarish process of a legal accounting audit begins.
In an effort to assist your firm in avoiding or surviving a legal accounting audit we have identified a number of legal accounting reports that your firm should have accessible at all times in the even your firms is being audited.
Legal Accounting Reports
A legal accounting auditor may be interested in a number of financial reports, there are a few in particular that may peak an auditor’s interest. Below you will find a list of reports an auditor is undoubtedly interested in.
- Bank Activity Report– A bank activity report will give the auditor a snapshot of all activity for the selected bank accounts within a specified date range. It is possible that an auditor may be interested in more specific banking reports including; your cash receipts journal, cash disbursement, and a reconciliation report.
- Client Billing Balance Report– The Client Billing Balance Report shows a detailed billing related balance statement for ALL matters of a client as of a particular date. The balances shown are unbilled and unpaid amounts.
- Trust Ledger Balance– A Trust Ledger Balance Report shows ledger card balances at a given point in time. Apart from showing the total balance, the report also breaks down bank cleared and uncleared balances.
- Three-Way Reconciliation– It is required that your administrator performs a 3-Way Reconciliation once every 30 to 60 days. In what may be one of the more scrutinized reports in a legal accounting audit, a three way reconciliation report displays book balance, adjusted bank balance (including bank cleared transactions and outstanding deposits/payment) and individual balances of all ledgers. The total balance of all three sections should be same.
Without legal accounting software generating these reports could prove to be quite difficult for your firm. It would require accurate data entry in multiple systems, and errors could mean disbarment for your firm.
Cosmolex provides legal accounting software that aligns law practice management, legal billing, and legal accounting so that your organization only has to enter data once. By eliminating the need to enter data multiple times your firm can be assured that all reports are comprehensive, complete, and accurate. If an apple a day keeps the doctor away, then clean reports keep auditors at bay.