Can a bookkeeper help my law firm prepare for a California Bar audit?
Yes, but you need someone with specific experience in law firm trust accounting. A general bookkeeper won’t know what the California State Bar is looking for during an audit.
The Bar examines your client trust accounts closely. They verify that IOLTA funds are properly maintained, that client money is never commingled with operating funds, and that every dollar in trust can be traced to a specific client matter. The core requirement is three-way reconciliation. Your bank statement, trust ledger, and individual client ledgers must all match perfectly.
A bookkeeper who specializes in law firm trust accounting can review your records before an audit and catch problems while there’s still time to fix them. This includes reconciling trust accounts through prior months, ensuring client ledgers balance to the trust account total, documenting old or unidentified balances, and verifying that all trust transactions have proper supporting documentation.
If you use practice management software like Clio alongside QuickBooks, the bookkeeper needs to verify that both systems agree. Discrepancies between your billing software and accounting records create exactly the kind of problems that cause audit issues.
The best approach is maintaining audit-ready books all year rather than scrambling when an audit notice arrives. Regular monthly reconciliations catch errors when they’re small and recent. Trying to reconstruct trust activity from two years ago is expensive, time-consuming, and stressful.
If you’re already facing an audit and your records are disorganized, a bookkeeper can still help organize what you have and identify what needs to be addressed. The earlier you start, the better your position will be.
Not every bookkeeper understands trust accounting rules. Los Angeles bookkeeping services that focus on law firms know both the State Bar requirements and the practical realities of running a practice. When your license is on the line, general bookkeeping experience isn’t enough.
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More Questions
What are the consequences of commingling client funds in my law firm?
Commingling client funds can result in State Bar discipline up to and including disbarment, criminal charges if funds are misused, civil liability for breach of fiduciary duty, and lasting reputational damage.
Read answerWhat is three-way trust reconciliation for law firms?
Three-way trust reconciliation compares your bank statement, your checkbook register, and the total of all individual client ledger balances. All three numbers must match exactly. This process is required by the California State Bar to ensure client funds are properly safeguarded.
Read answerHow do I set up IOLTA accounts in QuickBooks for my law practice?
Set up your IOLTA as a liability account in QuickBooks, not a bank account. You'll need sub-accounts or a tracking method for each client, plus the ability to run three-way reconciliations to satisfy California State Bar requirements.
Read answerHow do I track client trust funds separately from operating expenses?
Client trust funds require a separate bank account from your operating account. In your books, trust deposits create a liability to clients until fees are earned and transferred.
Read answerWhat is IOLTA trust accounting and why does my law firm need it?
IOLTA stands for Interest on Lawyer Trust Accounts. California attorneys must maintain these separate accounts to hold client funds and comply with State Bar requirements. Proper trust accounting protects both clients and your law license.
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