By: Vincent Farris

Unidentified and unclaimed trust monies

The existence of unidentified and unclaimed trust monies has in the past and, notwithstanding the advances made in banking technology, continues to be a problem for many attorneys and, indeed, also for auditors. How should these monies be dealt with? It has been recognised that a distinction has to be made between unidentified monies, i.e. where the identity of the person paying the money is not known, on the one hand and unclaimed monies where the identity is known but the monies remain unclaimed on the other. The Attorneys Fidelity Fund (AFP) issued e guideline to its members some time ago indicating that monies that are unidentified and unclaimed for a period of two years should be paid over to the AFP. There is, however, no obligation to do so. The AFF will reimburse the attorney on receipt of a proper motivation and with acceptable supporting documentary evidence. It is also to be noted that Section 93 of the Administration of Trust Estates Act demands that unidentified monies be paid over to the Guardians Fund. Auditors should be alert for any irregularities when performing their audits, as the existence of “suspense” and other similar accounts creates an ideal opportunity for fraud and misappropriation should motivation permeate as well. Suspense and clearing accounts could render fabrication of the true source, as fraud is concealed in these accounts. Attention should also be directed at clients’ trust credit balances that have shown very little or no movement over an extended period of time. Auditors should also be sceptical if told by the attorney that prescription applies to justify transfers from such accounts.

Fraud, misappropriation and other similar schemes

The decline in economic activity has resulted in a number of fraud, misappropriation and other related schemes and scams being exposed. The attorneys’ trust account is vulnerable to such frauds and auditors should accordingly be alert in performing their audits. In this regard, particular attention should be directed to bridging finance transactions. The incidence of claims against the AFP has increased, and the AFF will seek to recover any losses from an auditor that is found to have been negligent. In this regard, it should be noted that the Law Societies have adopted a more aggressive approach in reporting allegations of negligence to the IRBA. Auditors are accordingly well advised to ensure that their working papers are adequate. Sufficient, appropriate and reliable audit evidence must be gathered.

Reportable irregularities

Considerable discussion has been held on what is a reportable irregularity to the IRBA and what is reportable in the form of a qualification in the report to the relevant Law Society. In addition, discussion has also been held on the reporting responsibility if a contravention of a statute comes to the notice of the auditor, even if the auditor is not acting in his/her capacity as the auditor. In this regard, it may well be necessary to obtain Counsel’s opinion so that some form of definitive guideline can be formulated. In due course members will be Kept informed in this regard.


Both professions have accepted that the audit of a law firm requires a certain amount of expertise and specialisation and it may well be that, in the future, the legal profession may insist on some form of accreditation. There can be no doubt that there are risks in undertaking the audit of attorneys’ trust accounts, and members should ensure that they adapt their procedures to identify and disclose any irregularities and in so doing minimise their risk.