Trust & Compliance Reports

Trust accounting is where a clean practice and a license-threatening mess are separated by recordkeeping. Money your clients hand you before you’ve earned it is not your money. It sits in a separate trust account (often an IOLTA account), and every state bar holds you to the same standard: you must be able to show, at any moment, exactly whose money is in there and how much. The Trust & Compliance reports are the documents that prove it.

These five reports answer the questions a bar auditor, a grievance investigator, or a nervous client will ask: what is this client’s trust balance, where did every dollar come from and go to, and does your account actually balance? Three of them (IOLTA Balance, the Trust Ledger, and the Three-Way Reconciliation) are not optional niceties. They are required documentation for trust-account compliance, and the reason to run them is the same reason you carry malpractice insurance: the day you need them, nothing else will do.

IOLTA Balance

Lead with why: this is the report a bar auditor opens first. It shows the trust balance the firm is holding, and the total it lands on is the number that must match the balance on your trust account’s bank statement. If those two numbers agree, your trust account is whole. If they don’t, you have a problem to find before someone else finds it for you. IOLTA Balance is required for bar compliance, and it is the fastest way to confirm, month over month, that you are not accidentally holding too little (you’ve spent client money you shouldn’t have) or carrying a balance you can’t account for.

The report lays out trust activity by year, and within each year a row per month: that month’s receipts (money in), disbursements (money out), the net change, and the ending balance carried forward. Across the top, three summary figures give you the headline: the current balance, total receipts, and total disbursements. Reading down the ending-balance column, you can watch the account rise and fall over the life of the firm and spot any month where the numbers move in a way you didn’t expect.

You can export any single year, or the whole history, to Excel or PDF, which is exactly what you’ll hand an auditor or attach to a year-end file.

Trust Ledger

A bar examiner doesn’t just want the total. They want the story of one client’s money: every deposit, every payment out, and the running balance after each, so that the client’s funds are traceable from the first dollar in to the last dollar out. The Trust Ledger is that story for a single client, and it is required documentation for bar audits and for the moment a client disputes what happened to their retainer.

You pick a client, and the report shows that client’s complete trust history: each transaction’s date, type, reference number, and description, with the running balance after each entry. Because a single client can hold funds in more than one place, the ledger keeps the columns separate: money held for a specific case (case trust) is shown apart from general funds held for the client (client trust), each with its own running balance, so you never blur one matter’s money into another’s.

There is, deliberately, no date filter on the Trust Ledger. Trust compliance requires the complete history from the very first transaction, because a running balance only means something if nothing before it is hidden. Showing a partial window would produce a balance that looks right and isn’t. You can export the full ledger to Excel or PDF to file with the matter or produce on request.

Trust Receipts

When you need to see money flowing into trust across the whole firm rather than for one client, the Trust Receipts journal is the view. It’s the deposit side of your audit trail: every dollar received into trust, in date order, so you can tie deposits back to bank activity and confirm nothing landed in the account without a record.

Each row shows the date, reference number, the client and matter the funds belong to, the payor (who the money came from), a description, the amount, and a running balance that climbs as receipts accumulate. Three summary figures frame the period: the opening balance, total receipts, and the closing balance. A chart breaks down receipts by client, so you can see at a glance whose deposits made up the period.

Unlike the per-client ledger, this journal can be filtered by date range (it defaults to All Time), since an audit trail of deposits is naturally read by period: this month, this quarter, since the last reconciliation. You can export it to Excel or PDF.

Trust Disbursements

The mirror image of the receipts journal: every dollar paid out of trust, across the whole firm, in date order. Disbursements are where trust trouble usually starts (paying yourself before you’ve earned it, or paying one client’s bill out of another’s funds), so a clean, complete record of money leaving the account is the heart of staying out of trouble. Use it to walk every withdrawal and confirm each one was authorized and properly recorded.

Each row shows the date, reference number, the client and matter, the payee (who the money went to), a description, the amount, and a running balance that draws down as funds go out. The summary gives you the opening balance, total disbursements, and the closing balance, and a chart breaks down disbursements by client. Like the receipts journal, it can be filtered by date range (defaulting to All Time) and exported to Excel or PDF.

Three-Way Reconciliation

The Three-Way Reconciliation is the gold standard of trust-account compliance: it proves that your bank statement balance, your firm trust ledger, and the sum of every client’s balance all agree. Because running it is a periodic procedure with its own steps and variances to interpret, it has its own guide. See Three-Way Reconciliation for how to run it and read the result.

AR Aging

The AR Aging report also lives in this category, but it covers receivables (what clients owe you on invoices), not trust funds, and it has its own article. See The AR Aging Report for how outstanding invoices are grouped by how overdue they are.

Who Can See These Reports

Trust reports carry sensitive financial detail, so access is kept tight. Your Owner and Administrator always have access to every report. Beyond that:

• IOLTA Balance, Trust Receipts, Trust Disbursements, and Three-Way Reconciliation are limited to your bookkeeper, the person who actually keeps the trust account and runs the reconciliation.
• The Trust Ledger is available to your bookkeeper and to your legal staff (attorneys, paralegals, and legal secretaries), since the people working a matter often need to see that client’s trust history.

If a report doesn’t appear for someone, it’s almost always because their role isn’t on this list. Trust visibility is a deliberate part of compliance, not an oversight.