IOLTA Audit

Question

My client was randomly selected for a state audit of his IOLTA account. We followed their instructions and sent what we felt was more info than they asked for, but the auditor believes there is a $22,000 discrepancy in the selected months (I show a $7.86 discrepancy, which is an IOLTA interest sweep and we stated that). 
 Apparently we failed on the three point reconciliation. I ran a Funds Running Balance report from Timeslips and the IOLTA register with all detail from Quickbooks and cross checked everything. 
 I have googled the info and came up with a document from my state (CT) and one from Trust Books. It sounds like I should do an Excel or even handwritten reconciliation to get the third point of reference. 
 If anyone is familiar with IOLTA accounts I&rsquo;d appreciate some input so we can resolve it to the states satisfaction. 
 
 Thanks so much

Nancy Duhon · Accepted Answer

Whew, okay, let's see what I can answer based on this new information. 
 v2017 is no longer available from Sage because that version is no longer supported. Many of the consultants have the old downloads in our libraries. You can contact one of us about it. 
 What version was he running? What version are you running? Remember that as a general rule, once a database has been opened/converted into a higher version that it cannot then be reaccessed by a lower version. 
 Unclear what your scenario is from your post. 
 As for the 3 errors. You say " I have 3 checks that were payments on account and deposited into the Operating account correctly." That is just slightly confusing to me because usually when I see the words 'to account' or 'from account' that is a tell tale that the payment is going in or out of the trust/funds account. 
 Are you saying they were just paying their bill? I.e., paying what they already owed as an A/R? If so, then yes, it should have been deposited into Operating and posted as a regular PAY- Payment Thank You A/R transaction. 
 Sounds like instead they were posted as Payments To Account into the Timeslips funds account. Okay, I can then understand why this would be "wrong." But it should leave you with $$$ in the funds account to apply to the billed charges as a PFA - Payment from Account. So it confuses me when you next say "All three clients are paid in full. I would think this is all set, but I have no entries in Timeslips showing the sweep of these funds out of the funds account and am unsure how to show that correctly. The clients do show a zero balance." 
 Were the payments ALSO entered as A/R transactions? How did the balance get to zero without a payment? 
 If they were double entered as an A/R transaction as well as a Funds Transaction, and you just need to empty the funds without affecting the zero A/R balance, I would use a Withdrawal transaction to remove the funds and leave A/R alone along with a nice description detailing the error and how the Withdrawal is being put in to adjust for it. 
 Beyond that, this thread is getting a bit complicated to handle as a bulletin board thread. 
 Nancy Duhon, Esq. Duhon Technology Solutions, LLC Master Certified Consultant for Sage Timeslips Providing individual Consultations and Third Party Remote Desktop Support - including older/unsupported versions. 404-325-9779 duhon@duhon.biz

Nancy Duhon · Answer

The "interest sweep" should not be the difference because each month it is a net zero transaction: interest is earned and removed at the same time, with no change to the balance. 
 Yes, you would need to show either the starting balance at the beginning of the time frame, or all previous entries for it to show the true total on had per client. That sounds correct. 
 Basically, how much money are you holding total (bank and checkbook) and who does it all belong to (funds with running balances). 
 Not that you may need to include some closed clients as well if they had transactions in the period. Some firms only run that report on Open Clients. 
 Nancy Duhon, Esq. Duhon Technology Solutions, LLC Master Certified Consultant for Sage Timeslips Providing individual Consultations and Third Party Remote Desktop Support - including older/unsupported versions. 404-325-9779 duhon@duhon.biz

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IOLTA Audit

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