Attorney Trust Account Audit: What the State Bar CPA Reviewer Actually Asks For

Irvine Bookkeeping
1 day ago
4 min read

By Tammy Hoang, Certified QuickBooks ProAdvisor

An attorney trust account audit in California follows a defined checklist. The reviewer is a Certified Public Accountant approved by the State Bar, the engagement is agreed-upon procedures rather than a traditional audit, and the document requests are predictable. That predictability is the good news, because it means a firm can be ready in advance.

The State Bar began mandatory reviews on September 29, 2025, notifying selected firms in waves. With up to 800 licensees selected each year and roughly two percent of California attorneys reviewed annually, preparation is no longer theoretical for firms holding client funds.

This article lists what the reviewer requests, how each item is evaluated, and what a firm can do this month to be ready.

The Records the Reviewer Requests

Rule 1.15 and CTAPP together require a defined set of records, retained for at least five years. These are exactly what the reviewer will ask for.

Bank statements for every IOLTA and non-IOLTA client trust account covering the review period. Monthly three-way reconciliation reports, in writing, signed and dated. The trust account journal showing all activity chronologically. Individual client ledgers for every client with funds in trust, showing every deposit, every withdrawal, and a running balance.

Beyond the ledgers, the reviewer asks for written fee agreements specifying trust deposit requirements, and evidence of client notification of fund receipt within fourteen days. Supporting documentation for disbursements — what was paid, to whom, on whose behalf, and under what authority.

The reviewer also confirms CTAPP registration: that every trust account open at any point during the reporting period was registered, that the annual self-assessment was completed, and that compliance with Rule 1.15 was certified.

These recordkeeping requirements are not optional, and they are specifically what the State Bar's CPA reviewers ask for during a compliance review.

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How the Reviewer Evaluates What You Provide

The reviewer is not looking for elegance. They are looking for whether the records exist, whether they agree with each other, and whether they were maintained contemporaneously.

Contemporaneous is the word that matters. Reconciliations prepared in a single weekend after the notice arrived look exactly like what they are. Dates, signatures, and the internal consistency of the records make reconstruction visible. A firm is far better served producing eight honest monthly reconciliations and acknowledging four gaps than producing twelve that were all created last Tuesday.

Where balances do not agree, the reviewer traces the difference. Where client ledgers show negative balances, the reviewer identifies which client's funds covered the shortfall. Where disbursements lack support, the reviewer notes the gap.

The engagement typically takes three to four months and generally costs between five thousand and ten thousand dollars, paid by the attorney. Poor recordkeeping increases the cost and the timeline, because reconstruction is billable hours. Where the results warrant it, the State Bar may follow with investigative audits of the licensee's trust accounts.

Getting Ready Before the Notice Arrives

Preparation is a matter of closing gaps in a defined order.

Start by confirming your firm has appointed a Designated Licensee under Business and Professions Code section 6091.3, effective January 1, 2025. That person carries the primary regulatory burden and the reviewer will ask who it is.

Then pull the last twelve months. For each month, confirm you have a bank statement, a written three-way reconciliation, and a client ledger detail report. Note every month where one is missing. That list is your remediation plan.

Reconstruct the missing months in chronological order, working from bank statements and disbursement records, and date the reconstruction honestly rather than backdating it. Backdated records are a far more serious problem than late ones.

Audit yourself quarterly going forward. Pick a random sample of client matters and trace every transaction from receipt to disbursement. Check that your written procedures were followed. Document what you found and what you corrected.

The firms that get through a review comfortably are not the ones with perfect histories. They are the ones whose records show a consistent monthly practice and an honest account of any gaps.

The Cost of Being Unprepared

The direct cost is the review fee, and it scales with disorder. The indirect costs are larger.

Three to four months of partner attention diverted to reconstructing financial records is time not spent on client matters. Where findings are significant, investigative audits follow. Trust account violations consistently rank among the top sources of California attorney discipline, and over sixteen hundred attorneys have faced suspension in connection with non-compliance.

Set against that, professional attorney bookkeeping is inexpensive. Trust accounting services for California law firms generally run between five hundred and two thousand dollars a month depending on transaction volume and complexity — less than a fifth of what a single poorly-prepared compliance review costs, and it removes the risk rather than responding to it.

Proactive law firm bookkeeping done correctly every month is the cheapest form of CTAPP risk management available.

Get Your IOLTA Records State Bar Ready.

Talk with Irvine Bookkeeping about audit-ready trust accounting.

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Call or Text: (949) 482-2790 | irvinebookkeeping.com

Picture the reviewer's document request arriving and every item on it already sitting in one folder.

Irvine Bookkeeping keeps California law firms audit-ready with monthly three-way reconciliations, individual client ledgers, and documented trust records. QuickBooks certified.