Trust accounting under By-Law 9, as the auditor reads it.
Ontario lawyers and paralegals hold other people's money under rules that assume it will be checked. Here is what the Law Society actually requires month to month — and where firms genuinely fail spot audits.
Updated August 2026 · Reviewed by the VertAcc accounting team · Ottawa, Canada
The obligation in one sentence
Under the Law Society of Ontario’s By-Law 9, money received in trust for a client must be paid into a designated trust account and tracked through prescribed books and records — journals, individual client ledgers, transfer records — kept current enough that at any moment you can say precisely whose money the trust balance is.
The monthly three-way reconciliation
The operational heart of By-Law 9 is a monthly comparison of three numbers, completed within 25 days of month-end:
- the reconciled balance of the trust bank account,
- the trust ledger’s own running balance, and
- the total of every individual client’s trust ledger balance.
All three must agree, and differences must be identified — not absorbed, rounded away, or left for next month. A reconciliation with an unexplained difference is not a reconciliation.
Spot audits are mostly failed on mechanics, not theft: reconciliations done late or not at all, differences carried for months, client ledgers that no longer tie to the bank. These are bookkeeping failures — which means they are preventable by bookkeeping.
The records the examiner asks for
- Trust receipts journal and trust disbursements journal
- An individual trust ledger per client and matter — one client’s funds never netted against another’s
- The monthly three-way comparisons, with dates showing when they were done
- Source documents: deposit records and cancelled trust cheques or full electronic images from your financial institution
- A record of transfers between trust and general, with the reason
Two disciplines run underneath all of it: trust entries are permanent — an error is corrected by a reversing entry, never by deletion — and the trust account never holds your own money beyond what the rules allow, nor covers a general-account shortfall for even a day.
Where we come in
This is our niche. VertAcc is a certified LEAP Legal consultant — the practice-management platform much of small-firm Ontario runs on — and we have trained over 300 legal professionals on it. For law-firm clients we keep the trust books to By-Law 9’s forms, run the three-way reconciliation every month inside the 25-day window, and keep the record permanent by design, alongside the firm’s general books, tax and payroll. The lawyer reviews and signs; the mechanics stop being the risk.
The short version of working with us
VertAcc is an Ottawa accounting firm that writes its own software. Bookkeeping, tax, payroll and year-end run on a fixed monthly fee — no hourly meter, calls never billable, and the accounting platform is included with setup done free. If your books are behind or a deadline on this page is already past, that is ordinary work for us, not a judgement.