Wednesday, 25 March 2026
Introduction
ACT law practices that hold or receive trust money are required to comply with specific reporting and trust account audit obligations. These requirements include arranging external examinations of trust records, appointing an approved external examiner, and submitting exemption notices within prescribed timeframes.
This page provides an overview of when these obligations apply, available exemptions, and key responsibilities relating to external examinations.
External examination requirement
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At the conclusion of each trust accounting year ending 31 March, a law practice that has had an office in the ACT and has held or received trust money during the year must arrange for its trust records for the year to undergo an external examination, to be carried out by an external examiner appointed by the practice (LPA s 241(1) and LPR reg 66)
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A final external examination must also be undertaken when a law practice
(LPA s 244):
- stops being authorised to receive trust money; or
- stops engaging in legal practice in the ACT.
- Should either of those events take place between 1 April 2026 and 31 May 2026, the annual external examination and final external examination can be undertaken as a single examination, covering the period 1 April 2025 to the date of the event.
Exemption
- The requirement to arrange an external examination does not apply where the only trust money received or held by the practice during the period was transit money (LPR reg 67).
- Practices that have not held or received trust money of any kind in the trust accounting year are not required to arrange an external examination.
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A practice that is not required to arrange an external examination must submit to the Society the form labelled External Examination Exemption by 31 May 2026.
Appointment of External Examiner
- A practice that is required to arrange an external examination for the trust accounting year ending 31 March 2026 must appoint its external examiner by 8 April 2026 and notify the Society within 1 month of making that appointment (LPR reg 66). Notification can be made using the form labelled Appointment of External Examiner.
- The Council has recently determined that the requirement to notify the Society of external examiner appointments each year will be satisfied if the practice provided notification of the appointment in a previous year, and the examiner appointed has not changed.
- A practice can only appoint as its external examiner a person designated as such by the Society (LPA s 240). A list of designated external examiners is available here.
- A practice may not appoint an associate of the practice nor someone who is related to the practice’s regular bookkeeper.
Report Submission
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A written report of the examination must be submitted to the Society by the external examiner as soon as practicable after completing the external examination and no later than 31 May 2026.
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Where the report relates to a final external examination, the practice must submit the report to the Society within 60 days after the end of the period to which the examination relates (LPA s 244(3)).
Report Content
- The examiner’s report must address the items prescribed by Council (LPR reg 68).
- The current prescribed format, along with other guidelines developed by the Society have been provided to all designated external examiners, to support a consistent approach to external examinations.
Compliance with trust account obligations
- It is important to note that compliance with trust account obligations is among the suitability matters used to determine whether a person is entitled to hold a practising certificate (LPA s 11(1)(k)).
- If a law practice fails to comply with the requirement to have its trust records externally examined annually where it applies, each principal of the practice commits an offence (LPA s241(5)).
