As part of proper trust account record keeping, law firms are required to keep copies of deposit slips associated with the account. In the event of an audit, these slips help to create a paper trail to verify what your books say. Without them, an auditor could be left wondering what actually happened with the funds.
In some cases, banks don’t return the deposit slip and instead offer a receipt showing the cumulative amount deposited. In fact, this is often the case. Without having a list of the individual checks and deposits, law firms also have difficulty cross-checking the slips in the event an unbalanced reconciliation shows an error.
To prevent any issues, law firms should retain a copy of the deposit slip. This way there is no cause for concern should the bank fail to return the slip. If you are going to be making an electronic deposit, then you should document the transaction with an image of the deposited item.
Ultimately, copies are acceptable for record-keeping when it comes to deposit slips. If you’re unsure of whether or not you have enough documentation, it’s always better to err on the side of too many records than to undergo an audit and fail to provide what the auditor is seeking for.
Deposit slips are just part of the proper record-keeping associated with trust accounts. Law firms need to be sure their books are maintained and should have all records readily available, including:
- Individual trust account ledgers
- Deposit ledger
- Disbursement ledger
- Regular reconciliations, including three-way reconciliations
- Canceled checks
- Bank statements
Also, when ordering deposit slips, be sure they’re clearly labeled as a “Client Trust Account” or “IOLTA Account”. Prior to ordering, check with your local bar association to confirm the required term to use on the slip.