A Solo Practitioner’s First Audit. Mine Wasn’t Scary!

  • April 20, 2021
  • Birute Luksenaite

I started my sole practice in the spring of 2019. I was expecting that the Law Society of Ontario (LSO) would conduct an audit at some point over the first couple of years of my practice, but I wasn’t sure how its logistics would work during COVID-19. I don’t know any other sole practitioners who have recently undergone an audit, so I had no idea what to anticipate.

I received an email from a Spot Auditor (SA) at the LSO in early January 2021. The email notified me that a spot audit of my practice had been authorized under section 49.2 of the Law Society Act, which section mandates licensees’ financial records audits.

The email further stated that my audit would focus on my books and records to assess compliance with various LSO By-Laws and Rules of Professional Conduct and that the process would require me to complete a questionnaire, submit copies of certain requested documents and to attend a meeting by Zoom with the SA.

The questionnaire asked for information such as whether my firm’s accounting system was manual or software-based; what procedures I had in place to ensure that books and records are maintained at all times; it also asked for details about my trust accounts and signing authority over them; what procedures I had in place for dealing with any cash payments from clients; my procedures for handling real estate matters and related funds transfers and mortgages; and my procedures regarding client intakes and joint retainers.

The documents requested included copies of my monthly trust and general account statements, journals and reconciliations; private mortgage, estate and power of attorney fiduciary work file documents; and client identification, joint retainer and client invoicing forms.

The Zoom meeting with the SA took place after I had submitted the required information and documents. The meeting was helpful, because it gave me assurance about my practice management and helpfully pointed out a few formatting items that would benefit from improvement. The SA’s report followed.

The LSO’s Bookkeeping Guide for Lawyers provides details and helpful examples of what Ontario lawyers’ books and records should look like. If a lawyer doesn’t engage a specialized bookkeeper but follows the LSO prototypes, the books and records should generally meet the LSO requirements. If minor things aren’t formatted exactly as the samples demonstrate, this will be reflected in the SA’s report and reasonable time will be provided for bringing the books and records into required shape.

In mid-March I received a letter from the LSO’s Spot Audit Department confirming that my audit had been completed. I was so happy to have the audit happen within two years of launching solo, because it gave me a lot of assurance about my practice management at this foundational stage and also reminded me about the helpful LSO resources for lawyers.

About the author

Birute Luksenaite is a tax and estates lawyer providing services to complex estates that have an international footprint and also estates of artists and art collectors. In 2020-21 she is serving as vice-chair of the OBA Tax Law Section Executive.

Any article or other information or content expressed or made available in this Section is that of the respective author(s) and not of the OBA.