Spot Audit Program
The Law Society of Manitoba conducts Spot Audits of every law firm in Manitoba to ensure that they are handling trust funds appropriately and complying with the Rules relating to Financial Accountability. Members are required to keep up to date records at all times to properly account for their clients’ funds. Most audits are conducted on a “surprise” basis so that the auditor can observe the law firm’s records in their usual state.
Types of Audits
There are three types of Audits conducted:
1) Regular audits are routine audits conducted on a rotational basis;
2) New firm audits are typically conducted within the first year of a member opening his or her trust account. The aim is to ensure that members have established proper accounting systems and understand all the requirements concerning trust accounts.
3) Priority audits are conducted more frequently for firms having a history of trust related problems, or are of higher risk.
What to expect during a spot audit
The audit will generally take 1 -2 days but may vary depending on the size of the firm and the state of the law firm’s records. Although the auditor’s review focuses on the trust records, monthly trust reconciliations, and a review of selected client files, a limited review of the law firm’s general account records is also conducted. Typically within a month or so of the audit, the Society’s Auditor will send a letter to the law firm outlining the results of the audit and detailing any necessary changes that are required. If serious concerns and/or contraventions of the Law Society rules come to light during the audit, the results will be referred to the Discipline Department for further follow-up.