Three balances that have to agree, every month
IOLTAwise is for solo and small-firm lawyers, and the bookkeepers who keep their books, who hold client money in a trust account. It explains the records, the reconciliation and the rules behind them, and every rule cites the state or ABA rule it comes from.
A three-way reconciliation, with a sample firm's numbers
1. Bank statement
| Ending balance | $49,015.40 |
| Less outstanding check | −$1,200.00 |
| Plus deposit in transit | $400.00 |
| Adjusted bank balance | $48,215.40 |
2. Trust account journal
| Receipts and disbursements recorded through month end | |
| Journal balance | $48,215.40 |
3. Client ledgers
| Client A | $20,000.00 |
| Client B | $18,715.40 |
| Client C | $9,500.00 |
| Sum of client ledgers | $48,215.40 |
All three agree: $48,215.40
Sample firm and figures, invented to show the method: $49,015.40 − $1,200.00 + $400.00 = $48,215.40, and $20,000.00 + $18,715.40 + $9,500.00 = $48,215.40. If any one of the three differs, something is wrong in the records and has to be found before the next month.
Library
The first pages are being reviewed against state trust account rules. Each will cite the rule it relies on and the date it was checked.
How the rules are cited
Trust account rules come from each state's rules of professional conduct and the court or bar rules on trust account records, many of them modeled on ABA Model Rule 1.15. Each page names the rule it relies on and when it was reviewed. How IOLTAwise works