88-03 : Interest on Clients' Invested Funds

There appears to be some confusion among members as to the proper procedures to be followed in accounting for interest earned on funds invested in daily interest accounts, term deposits, etc. on behalf of individual clients, where the interest earned is payable to the client.

The Society will consider that the minimum compliance to rules respecting interest have been satisfied if the solicitor adopts the following procedure:

Daily Interest Accounts

Interest earned on daily interest accounts is to be recorded and credited to the client's trust ledger at the time the account is closed and the funds returned to the general trust account, provided that

1. at the solicitor's fiscal year-end he will record the interest accumulated to that date on all outstanding daily interest accounts, and

    

2. each monthly listing of daily interest accounts is supported by an up-to-date pass book or bank statement for each client.

Term Deposits. Guaranteed Investment Certificates. Etc.

Interest earned on all client funds invested in other than daily interest accounts must be recorded and credited to the client's trust ledger at the time it is credited by the bank, trust company or credit union.

(November 1988)