If your firm operates any trust accounts, the State Bar will require you to perform something called a three-way reconciliation periodically, most likely very 30-60 days.
A three-way trust reconciliation involves three components that must match:
Bank Account Balance (Trust Bank Statement)
Book Balance (Trust Ledger)
Balance By Matter (Client Ledgers)
Let's dive into how to perform a three-way reconciliation.
The bottom line
A three-way reconciliation is important because it ensures that you can identify any unusual transactions caused by fraud or accounting errors. As a law firm owner, the practice can help you manage your cash flow and spot any inefficiencies.
