When it comes to trust account audits, preparation is everything—and it starts with reconciliation. Inconsistent records, delayed reconciliations, or missing documentation can all raise red flags and put your firm at risk of failing an audit. But with a few proactive habits, you can keep your trust account tidy, transparent, and audit-ready year-round.

Whether you’re managing trust accounts for legal clients, real estate agencies, or other professional service providers, these reconciliation tips will help ensure everything adds up before your next audit rolls around.

1. Reconcile Monthly—Not Just Before the Audit

Waiting until audit season to tidy up your trust account is a recipe for stress and potential errors. Make it a policy to reconcile your trust account at least monthly—if not more frequently.

Monthly reconciliation helps catch discrepancies early, ensures your balances are accurate, and saves you from having to go back months to figure out what went wrong.

Tip: Use the same day each month to reconcile so it becomes part of your routine (e.g., the first Monday after month-end).

2. Match Bank Statements to Your Trust Ledger

A common mistake is only checking that the account balance matches the bank statement. But auditors will look deeper—they want to see that each individual transaction in your trust ledger matches the bank record.

Ensure you’re matching:

Deposits and withdrawals

Interest (if applicable)

Fees (note: many trust accounts don’t permit these, depending on the jurisdiction)

Disbursements linked to client matters

It’s not enough for totals to match; the supporting detail must line up too.

Check the Conveyance Trust Account Audit Service in Australia

3. Use a Three-Way Reconciliation

This is best practice—and often a regulatory requirement. A three-way reconciliation compares:

The trust ledger balance (client-level records)

The trust bank statement balance

The total of individual client ledger balances

These three figures should always match. If they don’t, it’s a signal that something is off—maybe a transaction was recorded twice, missed entirely, or posted to the wrong file.

4. Document Everything—Digitally and Clearly

Auditors don’t just want clean numbers—they want to see how you got there. That means keeping:

Copies of monthly reconciliations

Source documents for transactions

Client authorisations for disbursements

Clear notes explaining any corrections or adjustments

Using cloud-based accounting software can help automate and securely store this information. If you’re still working manually or on spreadsheets, be diligent about backups and file naming.

5. Separate Duties Where Possible

If the same person is receiving funds, recording transactions, and reconciling the account, it opens up potential issues—whether intentional or accidental.

Even in smaller firms, it's worth having another team member review the reconciliations periodically. This adds a layer of accountability and can reduce the chance of audit issues.

6. Know Your Regulatory Timeframes

Different states and professional bodies have different rules on how often reconciliation should occur and what needs to be reported. Don’t assume they’re all the same.

For example:

NSW Fair Trading requires legal trust accounts to be reconciled **monthly

**
CPA Australia and Chartered Accountants ANZ follow APES 310, which also places importance on timely and accurate trust money reporting

If you're offering trust account audit for accountant clients, it's even more important to stay on top of these requirements to protect your own reputation and theirs.

Takeaway: Reconciliation Is the Foundation of a Clean Audit

A well-reconciled trust account gives you confidence and peace of mind when the auditor comes knocking. More importantly, it protects your clients' money, maintains compliance, and upholds the professional standards your firm is known for.

So don’t leave reconciliation to the last minute—make it part of your regular workflow and turn audit season into a smooth, surprise-free experience.

Trust Account Reconciliation Tips Before Your Next Audit