GUIDELINES TO THE USE OF THE EXTERNAL EXAMINER’S CHECKLIST

  1. The review period is 1 April to 31 March and is based on compliance with the Legal Profession Act 2008 (Act) and corresponding Legal Profession Regulations 2009 (Regulations).
  2. An External Examiner is a person:
    1. the Legal Practice Board of Western Australia (Board) has approved as a designated accountant pursuant to section 235 of the Act; and
    2. the law practice has appointed as its External Examiner pursuant to regulation 70 of the Regulations.
  3. Upon being appointed as an External Examiner by a law practice, the External Examiner should remind the law practice of its obligation to notify the Board in writing of such appointment if they have not already done so. A notification form, Notification of Appointment or Termination of External Examiner, is available on the Board’s website.
  4. Section 237 of the Act requires that a law practice must at least once in each financial year have its trust records externally examined by the External Examiner. Section 241 of the Act requires that as soon as practicable after completing an external examination, the External Examiner must give a written report of the examination to the Board. The Board recommends that the External Examiner use the Board’s attached External Examiner’s Report. Provision of the written report in this format is optional. Further, the Board has also prepared a Law Practice Declaration and Trust Money Statement that the Board recommends the law practice complete to assist the External Examiner.
  5. This External Examiner’s checklist has been prepared to guide the law practice and External Examiner through the examination of the various forms of trust records maintained by the law practice and to assist in the assessment of compliance with the Act and Regulations.
  6. A completed copy of the checklist (if used) together with other review documentation should be retained by the External Examiner as part of their work papers and a copy of the checklist (if used) should also be left with the law practice.
  7. The External Examiner should apply professional judgement together with the various standards prescribed by the professional bodies which cover the individual circumstances of each examination.
  8. The objective of the checklist is to assist the law practice and the External Examiner to determine if the law practice has maintained trust records:
    1. that, in the opinion of the External Examiner, have been properly kept in accordance with the Act and Regulations; and
    2. in a way that enables the trust records to be conveniently and properly externally examined.
  9. It is necessary to conduct appropriate examination, sampling techniques and enquiries to form an opinion as to whether the accounting records have been maintained in accordance with the Act and Regulations. External Examiners must use their own judgement, based on their examination of the trust records, to form an opinion. The Board will not offer advice as to whether an issue in the records amounts to a breach of the Act of Regulations or warrants a qualified report.
  10. Breaches of the Act and/or Regulations may be recorded on Schedule 1 of the External Examiner’s Report.
  11. The name of the law practice should be accurately recorded. This may be recorded at Part A Item 1(a) of the Law Practice Declaration and Trust Money Statement (if used). Any change to the name of the law practice during the period requires a further separate written report to be prepared for the relevant period.
  12. All legal practitioners who were principals of a law practice, or in the case of a sole practitioner, the legal practitioner, or in the case of an incorporated legal practice, all legal practitioner directors at any time during the applicable period – 1 April to 31 March or part period thereof, should be recorded. If the Law Practice Declaration and Trust Money Statement is completed, this should be recorded at Part B Item 17. Principals include salaried, non equity partners as well as equity partners. Practices with interstate principals should include the names of those principals if they are authorised signatories.
  13. All general trust accounts operated during the period should be recorded. If the Law Practice Declaration and Trust Money Statement is completed, this should be recorded at Part B Item 2. Examples of when this may be relevant are:
    1. change of approved ADI’s;
    2. change or closure of the relevant branch of the approved ADI;
    3. opening of additional general trust accounts; or
    4. change of approved ADI account number.
    Particular emphasis should be placed upon general trust accounts closed during the reporting period. Any general trust account recorded as having a balance as at 31 March, in the previous year, must be recorded. If the Law Practice Declaration and Trust Money Statement is completed, this may be recorded at Part B Item 2.
  14. Ascertain all general trust accounts, controlled money accounts, accounts subject to a power and details of any investment of trust money disclosed by the accounting records which will be subject to the checklist. Details should be recorded. If the Law Practice Declaration and Trust Money Statement is completed, this may be recorded at Part B items 2, 7, 10 and 11.
  15. If the External Examiner chooses to complete the External Examiner’s Report, the External Examiner should ensure that every field on the External Examiner’s Report is completed. In areas where an examination is not required the External Examiner should put “N/A” in the box provided.
  16. Transit Money – There are no particular accounting records or register required by the Regulations to be maintained for transit money. It should be noted that section 222 of the Act requires transit money received in the form of cash to be deposited in the first instance to the general trust account.
  17. Trust Money Subject to a Power – Part B Item 10 of the Law Practice Declaration and Trust Money Statement suggests the recording of the total value of trust money subject to a power as at 31 March. If a precise figure cannot be determined, then an approximation is recommended. If a meaningful approximation cannot be made, then the box should be marked “not known”.
  18. The decision as to whether or not paid cheques need to be sighted is now left to the discretion of the External Examiner. The method and number of transactions selected is determined by each External Examiner. If the External Examiner is satisfied that the source records substantiate the payment transactions then the External Examiner may determine that the sighting of the paid cheques is not required.
  19. The written report must be lodged with the Board by 31 May to ensure processing and any matters arising may be addressed within the financial year. A copy of a qualified report is to be forwarded to the Senior Trust Account Inspector at the Board. If the written report by the External Examiner is delayed as a result of an approved ADI’s delay in providing information, External Examiners are requested to qualify their written report. Once the outstanding information is received, it is imperative that the External Examiner notifies the Board as soon as possible advising that the qualification is lifted.
  20. The External Examiner is required to lodge the original written report with the Board. A copy should be left with the law practice together with a copy of the completed checklist (if used).

External Examiner’s written report to be lodged by 31 May to:

Legal Practice Board
Level 5, Kings Building
533 Hay Street
PERTH 6000

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