Step-by-Step Tutorial: Law Firm Trust Account Examination & Audit

Each year, Australian law firms that hold trust money must complete Part A and Part B of the End of Trust Year Report through LSB Online. This Law Firm Trust Account Examination & Audit Guide explains how Victorian law firms should prepare their trust records, complete Part A and Part B, and meet examiner compliance requirements.

This Step-by-Step Tutorial: Law Firm Trust Account Examination & Audit aims to simplify the compliance process for law firms.

This guide explains:

• what Part A and Part B are,

• how to complete them correctly,

• the key requirements law firms must meet, and

• common mistakes that cause delays or compliance issues.

This guidance is based on official instructions issued by the Victorian Legal Services Board + Commissioner (LSB+C) and is intended to help law firms meet their obligations efficiently and accurately.

Step-by-Step Tutorial: Law Firm Trust Account Examination & Audit– Overview

Our Step-by-Step Tutorial: Law Firm Trust Account Examination & Audit provides a comprehensive overview of the requirements.

What Are Part A and Part B?

All annual trust Examination & Audit reporting is completed through LSB Online.

• Part A is a confirmation by the law practice about whether trust money was received or held during the trust year.

• Part B is a detailed statement of trust money, including reconciled balances and disclosures.

Both parts are completed by the law practice, not the external examiner.

Importantly:

• Part A must be completed first

• Part B cannot be accessed until Part A is submitted

• The external examiner cannot complete their report until both Part A and Part B are finalised

Trust Accounting Year and Timing

For Victorian law practices:

• Trust accounting year: 1 April to 31 March

• Part A and Part B due: 30 April

• External examiner’s report due: 31 May

Best practice is to complete Part A and Part B by mid-April, ideally within 10–14 days after 31 March, to allow time to resolve any issues before the examiner commences their work.

Step-by-Step Tutorial: Law Firm Trust Account Examination & Audit– Part A & Part B

The Step-by-Step Tutorial: Law Firm Trust Account Examination & Audit will guide you through essential steps.

Part A: End of Trust Year Confirmation

What Part A Is For

Part A confirms whether your law practice:

• received trust money,

• held trust money,

• operated a trust account, or

• had no trust activity during the year.

Even if your firm did not hold or receive any trust money, Part A must still be completed. This is a common point of confusion.

How to Complete Part A (LSB Online)

Follow our Step-by-Step Tutorial: Law Firm Trust Account Examination & Audit to ensure compliance.

1. Log in to LSB Online

2. Navigate to End of Trust Examination & Audit Year

3. Select Part A – Confirmation

4. Review and confirm your practice details

5. Answer the Yes/No questions about trust activity

6. Save and submit the form

Once submitted, Part A cannot be edited without regulator intervention, so accuracy matters.

Submitting Part A unlocks access to Part B in LSB Online.

Official LSB Instructional Video – Part A (Highly Recommended)
The Victorian Legal Services Board + Commissioner provides an official video guiding law firms through completing Part A of the end of trust year report in LSB Online.

Consider this Step-by-Step Tutorial: Law Firm Trust Account Examination & Audit before beginning your reporting.

This video demonstrates:

• How to navigate LSB Online for Part A

• Where to enter the required information

• Common mistakes firms make when completing Part A

Law practices are strongly encouraged to watch this video before starting Part A to reduce errors and delays.

Part B: Statement of Trust Money

What Part B Covers

Part B contains the detailed trust account information for the year. The sections shown in Part B depend on how you answered Part A.

Part B is crucial, and our Step-by-Step Tutorial: Law Firm Trust Account Examination & Audit offers clarity on what it covers.

Typical sections include:

• Trusts and Statutory Deposit Account (SDA)

• Controlled money (if applicable)

• Trust investments (if applicable)

• Specific powers

• Other trust-related disclosures

• Certification

Key Requirement: Reconciliation

The Step-by-Step Tutorial: Law Firm Trust Account Examination & Audit highlights the importance of reconciliation.

The most critical requirement in Part B is reconciliation.

Your:

• trust cashbook balance,

• trust bank balance, and

• trust ledger / trial balance

must reconcile. If they do not, you are required to provide an explanation, and this will almost certainly be scrutinised by the external examiner.

How to Complete Part B

Use this Step-by-Step Tutorial: Law Firm Trust Account Examination & Audit to complete each section thoroughly.

1. Access Part B – Statement of Trust Money in LSB Online

2. Complete each section that appears (not all firms will see every section)

3. Enter reconciled balances carefully

4. Review all disclosures

5. Complete the certification confirming the information is true and correct

6. Submit the form

Once Part B is submitted, the system notifies the external examiner.

Official LSB Instructional Video – Part B (Highly Recommended)
The Victorian Legal Services Board + Commissioner also provides a video walkthrough for Part B of the end of trust year report in LSB Online.

Refer to the Step-by-Step Tutorial: Law Firm Trust Account Examination & Audit for common mistakes to avoid.

This video explains:

• How Part A responses affect Part B

• Where to enter information for Part B

• Common areas where law firms make mistakes

Viewing this video before completing Part B ensures accurate reporting and minimises compliance issues.

Before starting the forms. Using the regulator’s own guidance significantly reduces mistakes and delays.

Common Mistakes Law Firms Should Avoid

Based on recurring issues seen during examinations:

• Completing Part A but delaying Part B until late April

• Attempting Part B before trust records are fully reconciled

• Treating 30 April as a “start date” rather than a deadline

• Changing trust records after submitting Part B

• Assuming the examiner will “fix” discrepancies

Part A and Part B are formal regulatory declarations. They must reflect the finalised trust records.

Step-by-Step Tutorial: Law Firm Trust Account Examination & Audit– Compliance Tips for Lawyers, Solicitors, and Law Practices

What to Have Ready Before Completing Part A and Part B

Before starting, ensure you have:

• finalised trust cash receipts and payments journals

• up-to-date trust ledger accounts

• reconciled trust bank statements

• trial balances (if maintained)

• controlled money records (if applicable)

• supporting documentation for transactions

If records are not finalised, completing Part B too early often creates inconsistencies that must later be explained.

Final Takeaway for Law Firms

For best practices, consult the Step-by-Step Tutorial: Law Firm Trust Account Examination & Audit.

Part A and Part B are not administrative formalities, they are foundational to your annual trust account Examination & Audit.

To stay compliant:

The Step-by-Step Tutorial: Law Firm Trust Account Examination & Audit reinforces the need for timely submissions.

• finalise trust records promptly after 31 March

• complete Part A first

• complete Part B only once reconciliations are accurate

• submit both parts by mid-April wherever possible

• notify your external examiner once they are complete

Early, accurate completion reduces regulatory risk and allows the Examination & Audit process to run smoothly.

Utilising the Step-by-Step Tutorial: Law Firm Trust Account Examination & Audit can minimise compliance risks.

Disclaimer

This article is provided for general information and educational purposes only. While care has been taken to ensure the information is accurate and based on publicly available guidance from the Victorian Legal Services Board + Commissioner at the time of publication, it does not constitute legal or regulatory advice.

This Step-by-Step Tutorial: Law Firm Trust Account Examination & Audit provides essential insights for law practices.

Law practices remain responsible for confirming their own compliance obligations and should refer directly to LSB+C publications, user guides, and official communications, or seek independent professional advice, before completing Part A and Part B or relying on this information.