The Advisory: Volume 8, Issue 4, October 2010
Safety of Trust Property Strategy Among Most Advanced
By Steve Raby, QC, Bencher and Chair, Trust Safety Implementation Task Force, Law Society of Alberta and Janet Dixon, QC, Senior Counsel, Law Society of Alberta
THE LAW SOCIETY of Alberta’s new Safety of Trust Property program is among the most advanced integrated strategies employed in the regulation of legal professions in the world.
The Law Society is on track to full implementation of its new program in January 2011.
What has happened since the Benchers approved the Roll-Out?
Earlier this summer, a pilot project began initially with several firms having a month-end date of June 30.
These firms, which met the participation criteria, were the first to submit their accounting data for the prior fiscal year using electronic file transfer technology. In exchange, these firms were relieved of their obligation to retain an accountant to perform an external audit and file a Form T.
The pilot participants were also required to propose a responsible lawyer who will undertake an online course hosted by Legal Education Society of Alberta. The firms are also required to submit an electronic law firm filing. This will replace the prior form S.
The Law Society is currently finalizing accounting rules, working with Legal Education Society of Alberta on a new online education program, and creating a new Safety of Trust Property department.
How will the program work?
The Safety of Trust Property program contains the following elements:
1. Ensuring adequacy of initial procedures and systems
Prior to opening a trust account, a law firm must get approval from the Law Society of a lawyer who will be responsible for meeting the requirements of the regulator and accountable for any non-compliance with those requirements.
2. Supporting the responsible lawyer
The designation as the responsible lawyer for a law firm is an onerous role. To support that Lawyer, the Law Society has designed the following tools:
- An online educational course has been prepared with two modules.
- A risk assessment tool has been designed to encourage the responsible lawyer to continually review the adequacy of internal procedures.
- The fraud alert web page of the Law Society will be maintained with linkages to the risk assessment tool to demonstrate to lawyers how adequate internal procedures mitigate the risk of falling prey to external scams.
- The law firm annual filing will have links to the risk assessment tool to encourage the responsible lawyer to consider the implications of the information being reported and the adequacy of the internal firm procedures in light of the specific firm information.
- The responsible lawyer will receive direct and timely feedback from the automated audit about exceptions noted in the accounting data.
3. Broad audit authority
It is critical to the success of the new Safety of Trust Property program that the Law Society be able to audit the compliance of lawyers and law firms to these new rules and to assess risks in each law firm. In general, information which is critical to the assessment of risks in each firm setting will be collected through an online firm self-report which must be completed annually.
4. Conducting timely and effective audits
Through an automated audit program, the Law Society is now capable of auditing 100 per cent of accounting transactions of any law firm utilizing approved law firm accounting software.
5. Remediation and enforcement
If concerns arise regarding the performance of a responsible lawyer or the safety of a law firm trust account, the initial focus of the program is to remediate the concern.
6. Continued excellence
The international accounting and audit community is continually developing strategies to identify and remediate risk to organizations arising out of external fraud schemes and internal procedural weaknesses. The Safety of Trust Program incorporates the current best practices available; new technology enables us to implement this program efficiently and effectively where we are able to rely on automation.
New risks to the safety of trust property are constantly emerging
In order to maintain safe accounting systems and procedures, lawyers must be wary of these risks and committed to continually assessing the safety and effectiveness of their accounting procedures.
The regulator has a role in providing continuing education and risk assessment tools to support lawyers in ensuring the safety of trust property.
Program Design to be Posted once Approved
The full program design will be posted on the Law Society website once approved by the Benchers at their meetings in Lethbridge, Alberta.
[Back to Index]