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Legal Profession (Audit) Regulations 2008 (NI)

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Reg No. 5 of 2008
Other document - Other as made
This is a regulation of the previous Norfolk Island Legislative Assembly that was continued in force under s16 and 16A of the Norfolk Island Act 1979.
Administered by: Infrastructure, Transport, Cities and Regional Development
Registered 21 Dec 2015

 

NORFOLK                            ISLAND

 

LEGAL PROFESSION (audit) REGULATIONS 2008

 

Regulations No. 5 of 2008

 

 


I, Owen Edward John Walsh, Acting Administrator of Norfolk Island, acting in accordance with the advice of the Executive Council of Norfolk Island, make the following Regulations under Section 46 of the Legal Profession Act 1993.

 

Dated 24 June 2008.

O.E.J. Walsh

            Acting Administrator

By His Honour’s Command

S.V. Jack

Minister for the Environment, Education and Social Welfare

Acting at the request of and for and on behalf of Minister for Tourism and Health

________

Part 1 Preliminary and definitions

Short title

      1.         These Regulations may be cited as the Legal Profession (Audit) Regulations 2008.

Commencement Date

      2.         These Regulations come into operation on 1 July 2008.

Application of the Regulations

      3.         These Regulations apply to practitioners holding a Norfolk Island certificate of entitlement to practise.

Definitions

      4.         (1)        Expressions defined in the Legal Profession Act 1993 bear their defined meanings in these Regulations.

                  (2)        In these Regulations, unless inconsistent with the context or subject matter ¾

      “the Act” means the Legal Profession Act 1993.

      “audit date” means 1 July in respect of the year or other shorter period ending on the previous 30 June.

      “auditor” means an auditor appointed by or under the Act to make an examination or audit of the practitioner’s trust accounts.


      “deficiency” means a lack of funds in a practitioner’s trust accounts generally as disclosed by the cash book or the other records of the practitioner’s practice or a lack of funds credited to any client in an account in the practitioner’s trust accounts;

      but does not include any deficiency ¾

                  (a)        which an auditor or inspector is satisfied was caused solely by bank error; or

                  (b)        which an auditor is satisfied was caused solely by inadvertence and the amount is restored within two days of the discovery of the deficiency.

      “firm” means a firm as defined in the Act and, in relation to a practitioner not being a firm, means ¾

                  (a)        a partnership of which the practitioner is a partner; or

                  (b)        a practitioner, partnership or person which employs the practitioner.

      “money” includes notes, coin, bills of exchange, promissory notes, cheques and other instruments convertible to cash, in any currency;

      “"mortgage” means a mortgage, charge, security, bill of sale, loan contract or any document purporting to secure or regulate the repayment of moneys but does not include a terms contract of sale of land;

      “nominee mortgage” means a mortgage wherein one or more mortgagees is a practitioner or a corporation of which a practitioner is a shareholder or director and is the nominee or trustee of or for a person (other than the practitioner) who is beneficially entitled to the security of and the moneys secured by the mortgage;

      “practitioner” has the same meaning as defined by section 3 of the Act and includes a person entitled to practise the profession of the law and, if the context admits or requires, a firm but does not include a person who is not a resident practitioner;

      “professional valuer” means a person with qualifications, experience and membership of a widely recognised professional body, such as the Australian Institute of Valuers and Land Economists;

      “section” means section of the Act;

      “transit money” means any trust money which is not paid into a trust account but is received by a practitioner and paid to another person;

      “trust money” means money received in the course of or in connection with the provision of legal services by a practitioner for or on behalf of another person and includes ¾

                  (a)        money received on account of legal costs in advance of providing the services; and

                  (b)        transit money; and

                  (c)        money controlled by a practitioner, alone or with an associate, pursuant to a power to deal with money for or on behalf of another person that is ¾

                              (i)         exercisable alone or with an associate;

                              (ii)        exercisable jointly and severally with the person or a nominee or nominees of the person.


      “trust records” include the following ¾

                  (a)        receipts in duplicate, except that a duplicate receipt is not required if an entry is made in the trust account journals simultaneously by carbon copy or computer program at the time of issue of the receipt;

                  (b)        cheque butts and/or cheque requisitions, except where particulars of payments are entered simultaneously by carbon copy or computer program at the time of issue of the cheque;

                  (c)        records of withdrawal by electronic funds transfer;

                  (d)       duplicate bank deposit slips;

                  (e)        trust account bank statements;

                  (f)        trust account receipts and payments journals;

                  (g)        trust ledgers;

                  (h)        monthly statements reconciling the trust bank accounts to the trust account journal balances and listing of trust ledger balances, including the names of the trust ledger accounts;

                  (j)         paid trust account cheques (these records are not required to be kept by a practitioner and can be held by the bank on his or her behalf).

                  (k)        trust transfer journal;

                  (m)       trust account statements;

                  (n)        all registers required to be maintained under these Regulations;

                  (p)        files relating to trust transactions and bills of costs.

Part 2 - Auditors

Appointment and Termination of Auditor

      4A.      (1)        A practitioner who is required to appoint an auditor must appoint either ¾

                  (a)        The Norfolk Island Government Auditor; or

                  (b)        a registered company auditor within the meaning of the Corporations Act (Commonwealth) or the Companies Act 1985 (Norfolk Island) and who is experienced in the audit of solicitors or practitioners trust accounts.

                  (2)        A practitioner must notify the Law Society in writing of the person appointed to be auditor of the practitioners trust account and must also file notice of consent of the auditor in accordance with Form 1 and a copy of each must be filed with the Registrar.

                  (3)        The auditor must not, without the prior written approval of the Law Society, appoint a person or permit a person to continue to audit a practitioner’s trust accounts if he or she carries out work for that practitioner, other than ¾

      (a)        the auditing of any other accounts maintained by that practitioner on the practitioner’s own behalf or on behalf of other persons in connection with the practice; and

                  (b)        advisory or consulting duties consequential upon his or her function as an auditor.

        Note: For references to the Law Society see regulation 50.

Disqualification of Auditor

      5.         Unless the Law Society approves in respect to any particular circumstance, a person being an employee of or member of the firm of the auditor is disqualified from auditing a practitioner’s trust accounts if ¾

                  (a)        the person is, or at any time within two years before appointment has been, engaged in keeping any of those trust accounts;

                  (b)        the person is, or at any time within two years before appointment has been, a clerk, servant or partner of the practitioner;

                  (c)        the person is a person closely related to the practitioner by blood or marriage;

                  (d)       the person is in practice as a practitioner;

                  (e)        the person is a clerk, servant or partner of another practitioner, or

                  (f)        the person attending on the practitioner’s practice for the purposes of the audit has not in the previous two years attended in a State or Territory a seminar on the audit of solicitors’ trust accounts.

Part 3 – Requirements of audit

Statement of Trust Moneys

      6.         (1)        Except where a statutory declaration has been delivered under Regulation 4 of the Legal Profession (Practice) Regulations in respect of the year ending on the preceding audit date a practitioner or the practitioner’s personal representative shall not later than one month after the audit date prepare, certify and sign three copies of a statement in or to the effect of Form 2 and shall deliver the three signed copies of the statement to the practitioner’s auditor and a copy to the Law Society and the Registrar.

                  (2)        Where two or more practitioners practise in partnership, it is sufficient compliance with this Regulation in respect of each of them if ¾

                  (a)        the statement contains ¾

                              (i)         particulars of the whole of the practitioner’s trust accounts of the firm; and

(ii)      separate particulars of any trust money of which any of those practitioners is a trustee apart from the practitioner’s partner or partners; and

(b)      the certificate in the statement is signed by each practitioner individually or where the practitioners have unanimously resolved to be bound by the signature of one of them, by that practitioner and by the auditor in respect of each of them.

Requirement to Arrange Audit

      7.         A practitioner who is required by the Act to have a trust account audit shall cause the practitioner’s trust accounts to be audited and the auditor shall conduct the audit in the manner prescribed by the Act and these Regulations, and in so far as they apply, in accordance with the Australian Auditing Standards.


Auditor’s Duties

      8.         (1)        In carrying out an audit under the Act, an auditor shall ¾

                  (a)        ascertain whether any trust bank account was kept by the practitioner during the period covered by the audit;

                  (b)        make test examinations of any trust bank accounts and any statements relating to it during that period;

      (c)        (i)         make test examinations of trust securities and investments and of the registers referred in Regulations 19 and 22;

                              (ii)        the Register of Interests is not subject to audit but the practitioner’s auditor is to confirm in the Auditors Report (Form 3) that the practitioner has maintained a Register of Interests and whether or not entries have been made to the register during the period covered by the audit;

                  (d)       make a comparison as at two or more days (one to be the audit date and the other or others to be a date or dates during the period covered by the audit selected by the auditor without notice to the practitioner) between the liabilities of the practitioner to the practitioner’s clients and to other persons in connection with the practitioner’s practice as shown by the practitioner’s trust accounts; and

                  (e)        make such checks and examine such accounting records (including records for accounts other than trust accounts) and such number of files representative of every part of the practitioner’s practice as the auditor considers reasonable in the circumstances, to enable the auditor to express an opinion as to whether the practitioner has complied with the requirements of the Act relating to how practitioners and firms handle trust money.

                  (2)        On or within one month after the date or dates selected by the auditor for the making of the comparison referred to in paragraph (1)(d), the auditor or a member of the auditor’s staff, on the direction of the auditor shall, without notice to the practitioner, visit the practitioner’s practice and shall examine the practitioner’s trust accounts and the books and papers relating to the practitioner’s practice.

Auditor’s Duty to Report Certain Matters

      9.         (1)        The auditor shall report to the Law Society and the Registrar forthwith if at any time he or she ¾

                  (a)        considers that any trust accounting records of a practitioner are not being kept in such a manner as to enable them to be conveniently and properly audited;

                  (b)        becomes aware of a loss or deficiency of trust money or a failure by a practitioner to pay or account for any trust money;

                  (c)        becomes aware of any failure by a practitioner to comply with any of the provisions of the Act or these Regulations; or

                  (d)       considers any other matter arising in the course of an audit should be communicated to the Registrar.


                  (2)        A report of a loss or deficiency under this Regulation shall provide at least the following information ¾

                  (a)        the date on which it occurred;

                  (b)        the amount;

                  (c)        how it occurred; and

                  (d)       the date and manner of any restoration.

Auditor’s Annual Report

      10.       (1)        Upon completion of the audit of a practitioner’s trust accounts and not later than 31 May each year the auditor shall ¾

                  (a)        sign a certificate in or to the effect of the certificate in Form 2;

                  (b)        sign a report in or to the effect of Form 3;

                  (c)        lodge the originals with the Registrar; and

                  (d)       forward signed copies thereof to the practitioner.

                  (2)        The auditor’s lodging of the report and certificate with the Registrar shall be deemed to be a lodging thereof by the practitioner.

                  (3)        Where two or more practitioners practise in partnership, it is sufficient compliance with this Regulation in respect of each of them if one audit report is lodged with the Registrar ¾

                  (a)        naming each practitioner individually; and

         (b)        covering not only the trust accounts of the partnership but also the trust accounts of the individual practitioners concerned.

Availability of Auditor's Report

      11.       The auditor’s report on a practitioner’s trust accounts for any year shall, at all times be available there for inspection by the auditor appointed to audit that practitioner’s trust accounts for the next succeeding year.

Part 4 – Accounting records, etc

Receipting of Trust Money

      12.       (1)        Receipts are to record the practitioner’s name, be consecutively numbered and identified as trust account receipts.

                  (2)        The following particulars are required to be recorded on each receipt issued to record the receipt of trust money ¾

                  (a)        the date of issue of the receipt and, if different, the date of receipt of the money;

                  (b)        the amount of money received;

                  (c)        the form in which the money was received;

                  (d)       the name of the person from whom the money was received;

                  (e)        details clearly identifying the ledger account to be credited, including the name of the person on whose behalf the money was received and the matter description;

                  (f)        the purpose for which the money was received;

                  (g)        the signature of the person who issued the receipt.

                  (3)        Duplicate receipts are required to be kept unless particulars are simultaneously recorded by carbon copy or computer program in the journal at the time of issue of the receipt.

                  (4)        Where a receipt is cancelled or not issued, the original must be attached to and retained with the duplicate.

                  (5)        Receipts are to be made out as soon as practicable following receipt of the trust money or in the case of a direct deposit, as soon as practicable after the practitioner becomes aware of the deposit.

Deposit of Trust Money

      13.       (1)        Trust money is to be deposited to a trust bank account as soon as is reasonably practicable.

                  (2)        Details of money deposited to a trust bank account are to be recorded on a bank deposit slip.

                  (3)        The following details are to be recorded on each bank deposit slip in respect of each cheque banked to a trust bank account ¾

                  (a)        the name of the drawer of the cheque;

                  (b)        the name of the bank against which the cheque was drawn;

                  (c)        the branch of the bank against which the cheque was drawn;

                  (d)       the amount of the cheque.

                  (4)        Where cash is deposited to the trust account the duplicate deposit slip is to be receipted by the receiving bank and is to be retained for each such deposit.

                  (5)        Duplicate bank deposit slips are to be retained in a bank deposit book or are to be otherwise securely filed in chronological order.

Payment of Trust Money

      14.       (1)        Payments are to be made by a cheque or by electronic transfer.

                  (2)        Cheques are to be crossed “Not Negotiable”.

                  (3)        Cheques are to be issued payable to order.

                  (4)        Cash payments, ATM and telephone banking transactions are prohibited.

                  (5)        Cheques are to record the name of the practitioner and the words “trust account”.

                  (6)        A cheque butt is to be kept as a record of each payment unless particulars are entered simultaneously by carbon copy or computer program into a journal at the time of issue of the cheque.

                  (7)        The following particulars are to be recorded on each cheque butt or electronic transfer record in respect of each payment from a trust account ¾

                  (a)        the date;

      (b)        the number of the cheque, or in the case of electronic transfer the transaction identification number.

                  (c)        the amount;

                  (d)       the name of the person to whom the payment was made, or in the case of a cheque made payable to a bank, the name of the bank and the name of the person receiving the benefit of the payment;

                  (e)        details clearly identifying the ledger account to be debited, including the name of the person on whose behalf the payment was made and the matter description;

                  (f)        details of the purpose for which the payment was made.

                  (8)        Where cheque requisitions or some other record are used in lieu of cheque butts, the requisition or other record must record the details referred to in subregulation (7) and are to be stored in numerical order.

Recording of Transactions on Trust Account Journals

      15.       (1)        The following details are to be recorded in the receipts journal in respect of each receipt ¾

                  (a)        the date of issue of the receipt and, if different, the date of the receipt of the money;

                  (b)        the receipt number;

                  (c)        the amount of money received;

                  (d)       the form in which the money was received;

                  (e)        the name of the person from whom the money was received;

                  (f)        details clearly identifying the ledger account to be credited, including the name of the person on whose behalf the money was received and the matter description;

                  (g)        the purpose for which the money was received;

                  (h)        the date and amount of each deposit to the trust bank account.

                  (2)        The following details are to be recorded in the payments journal in respect of each payment ¾

                  (a)        the date;

                  (b)        the cheque number, or in the case of an electronic transfer the transaction identifier number;

                  (c)        the amount;

                  (d)       the name of the person to whom the payment was made, or in the case of a cheque made payable to a bank, the name of the bank and the name of the person receiving the benefit of the payment;

                  (e)        details clearly identifying the ledger account to be debited, including the name of the person on whose behalf the payment was made and the matter description;

                  (f)        details of the purpose for which the payment was made.

                  (3)        Details of receipts are to be recorded in the receipts journal in the order in which they are issued within five working days of issue.

                  (4)        Details of payments are to be recorded in the payments journal in the order in which they are made within five working days of the drawing.

                  (5)        Separate journals are to be maintained for each trust bank account.


Recording of Transaction in Trust Ledger

      16.       (1)        A separate ledger account is to be maintained for each matter in respect of which trust money has been received and for each client or person for whom trust money has been received in that matter.

                  (2)        Each ledger account is to record the following information in the title ¾

                  (a)        the name of the person on whose behalf the money is held;

                  (b)        the person’s address and postal address;

                  (c)        particulars sufficient to identify the matter.

                  (3)        The following details are to be recorded in the trust ledger in respect of each receipt ¾

                  (a)        the date of issue of the receipt and, if different, the date of receipt of the money;

                  (b)        the receipt number;

                  (c)        the amount;

                  (d)       the form in which the money was received;

                  (e)        the name of the person from whom the money was received;

                  (f)        the purpose for which the money was received.

                  (4)        The following details are to be recorded in the trust ledger in respect of each payment ¾

                  (a)        the date;

                  (b)        the amount;

                  (c)        the cheque number;

                  (d)       the name of the person to whom payment was made, or in the case of a cheque made payable to a bank, the name of the bank and the name of the person receiving the benefit of the payment;

                  (e)        the purpose for which the payment was made;

                  (f)        where the payment is made by electronic transfer the processing payment date, name of the beneficiary account together with the BSB, account number, the remitted amount and the payment description shall be recorded.

                  (5)        Transactions are to be recorded in the trust ledger in the order in which they are issued within five working days.

                  (6)        The following details are to be recorded in the trust ledger account in respect of each trust transfer affected by journal entry ¾

                  (a)        the date;

                  (b)        the amount;

                  (c)        journal reference number;

                  (d)       the name of the trust ledger account from which or to which the money is transferred.

                  (e)        the purpose for which the money was transferred.

                  (7)        The balance is to be recorded in a trust ledger account after each receipt, payment or journal transfer.

Journal Transfers

      17.       (1)        Trust money may be transferred from one trust ledger account to another by journal entry.

                  (2)        Trust money may only be transferred from a trust ledger account by journal entry if the practitioner is entitled to pay the money from the trust account for that purpose and the transfer has been authorised in writing by a signatory to the trust bank account.

                  (3)        A journal is to be kept to record the following details in respect of each journal transfer ¾

                  (a)        the date of the transfer;

                  (b)        the trust ledger account from which the money is transferred;

                  (c)        the trust ledger account to which the money is transferred;

                  (d)       the amount transferred;

                  (e)        the purpose of the transfer.

                  (4)        Journal pages are to be consecutively numbered.

Reconciliation of Trust Records

      18.       The trust records are to be reconciled within fifteen working days from the end of each month as follows ¾

                  (a)        each trust journal (cash book) is to be totalled;

                  (b)        details of the balancing of each trust account journal are to be recorded and retained as a permanent record;

                  (c)        the balance of each trust bank account is to be reconciled with the balance of the trust account journals;

                  (d)       each bank reconciliation statement is to be recorded and retained as a permanent record;

                  (e)        a list of trust ledger accounts including names of accounts must be reconciled to the trust account journal balance and retained as a permanent record.

Register of Investments and Securities

      19.       (1)        A practitioner shall keep a Register of Investments and Securities, in or to the effect of Form 5, recording all investments and securities, other than securities required to be entered into the Mortgage Register, over which the practitioner, the practitioner’s firm, a practitioner’s nominee company of which the practitioner is a director or an incorporated practitioner of which the practitioner is a director, shareholder or participating employee has or may exercise exclusive control, for or on behalf of or in trust for other persons.

                  (2)        The Register shall include the following particulars ¾

                  (a)        the name of the person for whom the security is held or the investment is made;

                  (b)        the date upon which the security was received or the investment was made;

                  (c)        the amount of the security or investment;

                  (d)       the interest received;

                  (e)        details (including the cheque book number or other means of identification) of the payment whereby the investment was made;

                  (f)        the description of the security or investment such as to enable proper identification of the security or investment;

                  (g)        the date on which the security was delivered or the investment was redeemed; and

                  (h)        details of disposal of the security or redemption of the investment.

                        (3)        Each of the particulars mentioned in subregulation (2) shall be entered in the Register as soon as possible.

Transit Money

      20.       (1)        If a practitioner receives any transit money, the practitioner shall transmit it or hand it over to the client or other person due to receive it.

                  (2)        The practitioner must record the following information in a trust ledger account for the matter in respect of which the transit money was received ¾

                  (a)        the date on which the money was received;

                  (b)        the name of the person from whom the money was received;

                  (c)        the amount received (which may be recorded in the narration column only);

      (d)       the identity of the person to whom the money was paid;

                  (e)        in the case of a cheque or draft the name of the drawer;

                  (f)        brief particulars to identify the relevant transaction and any purpose for which the money was received;

                  (g)        the date on which the money was paid.

                  (3)        Nothing in this Regulation shall require the recording of the receipt and payment of money where the person to whom the money is transmitted by the practitioner is the payee and is present at the time the money is received by the practitioner.

Retention of Records

      21.       (1)        Trust account records shall be retained for not less than seven years following the completion of the matter.

                  (2)        Subject to instructions from the practitioner’s client, a practitioner may, in respect of any original documents which are the property of the client, retain a record of the document on a disc or other device provided that it is capable (with or without the aid of some other equipment) of being reproduced therefrom and the copy produced would satisfy the requirements of the Evidence Act 2004 for admissibility of reproduction of business documents destroyed, lost or unavailable.

Register of Powers of Attorney and Estates

22.            A practitioner must keep a register of powers of attorney and estates where the practitioner may act solely, recording ¾

                  (a)        the name and address of the donor and date of any power of attorney granted to the practitioner; and

                  (b)        the name and date of death of the deceased of any estate of which the practitioner is an executor or administration.

Register of Interests

      23.       Practitioner shall keep a Register of Interests recording to the extent that the practitioner is able to obtain the information ¾

                  (a)        the names of all companies, other than companies listed on the Australian Stock Exchange or shelf companies which have not traded and are maintained for sale of which the practitioner or any member of the immediate family of the practitioner is a director, shareholder or in which the person has a beneficial interest; and

                  (b)        sufficient details to enable identification of any partnerships, joint ventures, trusts or other business interests in which the practitioner or any member of the immediate family of the practitioner has a joint interest with a client of the practitioner.

“Member of the immediate family” includes spouse, child and spouse of a child, and for the purposes of this definition a person who lives with another person as a spouse although not legally married to that other person, shall be deemed to be related to that other person in the same manner as he or she would be if he or she were married to that other person.

Part 5 – Special Duties

Maintaining an Account in a Practitioner's Own Name

      24.       A practitioner may maintain in the trust ledger an account in the practitioner’s name provided that the account is ¾

                  (a)        for the purpose of aggregating in the account by transfer from other accounts in the trust ledger money properly due to the practitioner for costs and disbursements; or

                  (b)        in respect of money in which the practitioner has a personal and beneficial interest as a vendor, purchaser, mortgagor, mortgagee, lessor, lessee or other similar capacity; and

                              (i)         the practitioner withdraws the money held in an account described in subregulation (a) not later than one month after the day on which the money is transferred to the account; and

                              (ii)        money held in an account described in subregulation (b) is withdrawn at the conclusion of the matter to which the money relates or, if the money is received by way of periodic payment, it is withdrawn not later than six months after the date of its receipt;

                  (c)        for the purpose of paying any bank or government charges associated with the conduct of the account, the balance of the ledger must not exceed $200.

Dormant Balances

25.       At the end of each audit year a practitioner who has a balance in a trust ledger which has not changed during that year, must advise the Registrar of the name of that account, the purpose of the account and the reason the balance has not changed in that year.

False Names

26.       A practitioner shall not knowingly receive money or record a receipt of money in the practitioner’s trust accounting records under a false name.  If a person on whose behalf money is received is commonly known by more than one name, the practitioner’s trust accounting records must record all names by which the person is known.

Statements of Account

27.       A practitioner who receives trust money must, upon the reasonable request of the client, during the course of or after the completion of a matter, furnish to the client within a reasonable time after receiving such request, a statement of account showing in that statement, or by reference to another statement of account, particulars of all trust money in connection with the matter ¾

(a)        received by the practitioner from the client or any other person;

(b)        disbursed by the practitioner; and

(c)        remaining undisbursed.

Withdrawal of Costs and Disbursements

28.         (1)        Subject to section 22 of the Act, a practitioner may apply trust money for the practitioner’s own use if, but only if, the practitioner applies that money ¾

(a)        by way of reimbursements of money already paid by the practitioner on behalf of the relevant client; or

(b)         for or towards payment of the practitioner’s costs for work which has been performed for that client and details of such costs, and a statement of account showing the particulars referred to in Regulation 27 have been posted or personally handed to that client as soon as is reasonable within two working days from the day the practitioner applies the money.

(2)        In this Regulation, a practitioner is deemed to have paid money if the cheque, draft or other instrument paying the money has left the possession and control of the practitioner within two working days from the day the practitioner applies the money.

Notification of Deficiency

29.       A practitioner must forthwith notify the auditor and Registrar upon a loss or deficiency occurring in any of the practitioner's trust accounts.

New or Closed Trust Bank Accounts

30.       Within 14 days after the opening of any new trust bank account or the closing of a trust bank account a practitioner must notify the auditor, and the Law Society and the Registrar the name and number of the account, the bank and branch at which the account is or was held and the date on which the account was opened or closed as the case requires.

Part 6 - Miscellaneous


Interest Bearing Accounts

      31.       (1)        Subject to subregulation (2), a practitioner shall not pay to the credit of an interest bearing account or deposit any trust moneys held by the practitioner for more than one person.

                  (2)        Subregulation (1) shall not apply where ¾

                  (a)        a practitioner pays to the credit of an interest bearing account or deposit any trust moneys held by the practitioner for two or more persons and has the written authority of those persons to do so, and

                  (b)        the Law Society has determined, in respect of that interest bearing account or deposit or interest bearing deposits of a class which includes that interest bearing account or deposit, that satisfactory arrangements exist to ascertain, at any time, the respective entitlements of those persons to the moneys to the credit of that account or deposit, and to the interest on those moneys.

                  (3)        For the purposes of this Regulation an investment account held by a practitioner for two or more persons jointly shall be deemed to be held by the practitioner for one person.

Part 7 - Exemptions

Exemptions

      32.       Despite the provisions of these Regulations, the Law Society may ¾

                  (a)        exempt a practitioner from complying with any of the provisions of the Regulations subject to such conditions as the Law Society may impose; and

                  (b)        vary those conditions, or revoke that exemption, at any time.

Part 8 – Transitional

First appointment of auditor

      33.       (1)        A practitioner who is required to appoint an auditor must do so on or before 1 June 2008.

                  (2)        A practitioner who does not comply with subregulation (1) ceases to be a registered practitioner.

                  (3)        A practitioner who continues to practise notwithstanding having ceased to be a practitioner commits an offence.

      Penalty:           50 penalty units.

Procedure before an arrangement is made under section 14(2) or 16(1)

      34.       If an arrangement has not been made under section 14(2) or 16(1), of the Act the Registrar shall examine the audit reports received and if he or she is of the opinion that a report shows that a practitioner has or may have committed an offence, refer the report to the Crown Counsel for the purpose of taking or recommending to the Registrar such action as may be appropriate in the circumstances.


Provisions applicable to the Law Society

      35.       If an arrangement has not been made with the Law Society under section 16(1) of the Act then until such an arrangement is in force, any consent or approval required to be given by the Law Society may be given by the Registrar and shall have the same effect as if given by the Law Society and any notice required to be given to the Law Society shall be given to the Registrar.

 

 


SCHEDULE

                                                                                    FORM 1                                                            Regulation 7

CONSENT TO APPOINTMENT

      I,.....................................................of.............................................practising

 as a member of the firm of........................................................................,

 hereby consent to act as auditor of the practitioner’s trust accounts of...........................and.........................member(s) of the firm........................................................................................................

I declare that I am not disqualified by virtue of Regulation 5 of the Legal Profession (Audit) Regulations from auditing the practitioner’s trust accounts.

I declare that I am an approved auditor and that:

(i)   I am a member of either CPA Australia, Institute of Chartered Accountants in Australia or the National Institute of Accountants and meet the requirements to practise as a public accountant

                (ii)  I am a registered company auditor under the Corporations Act (Commonwealth)and/or the Companies Act 1985 (Norfolk Island)

              (iii)  I have completed or substantially assisted in carrying out the audit of the trust accounts of at least two practitioners in respect of any of the previous 3 audit years

      I am a member of       ..................................................................................................................*

      Dated:

      (Signed)..........................................

      *Insert the professional body of which the auditor is a member.

FORM 2

      Regulations 14 and 9

STATEMENT OF TRUST MONEYS

      Name of practitioner or firm of practitioners

      ..................................................................................................................

      1.   The total of all trust money held by ...........on 30 June .......... was $                           

      or *

      The total of all trust moneys held by the firm of

      ...................................................................... on 30 June.......... was $    

      The total of all separate trust moneys held by

      ...................................................................... on 30 June.......... was $                           

                                                                                                                                  Total (e) $                           

      2.   Details of those moneys are:-

      Deposited with (a) ............................. as per bank statement  $                           

      less unpresented cheques (b)                                                       $                           

      add moneys not deposited (c)                                                       $                           

      Other adjustments (d)                                                                     $                           

                                                                                                                                Total  (e) $                           

      Trust Balances

      3.   The names of all persons on whose behalf those moneys were held and the amount to the credit of each person were:-

Total (e) $                            

      Dormant Balances

      4.   Trust ledger balances which have remained unchanged during the preceding period of twelve months ending on 30 June.......... were:-

(include names, balances, date of last transaction and the reason why no change has taken place.)

      Investment and Securities Register.

      5.   The amount of the security or investment, name of bank or institution, account number and name at 30 June.......... of all moneys required to be entered in the Register of Investments and Securities under Regulation 22.

      Provide particulars disclosing name of the person for whom the money is held or invested.

      Mortgages

      6.   Particulars at 30 June.......... of all current mortgages required to be entered in the Mortgage Register under Regulation 9(1) disclosing at least the names of the mortgagors, the sums borrowed and secured by the mortgages, whether the mortgages are nominee mortgages, any particulars of any default in payment of principal or interest of longer than four months and the duration of the default

 

      I/We

      (f)...............................................of..............................................(firm

      of practitioners) certify that the above statement is true and correct in every particular and relates to all trust moneys, trust investments and trust securities held by me/us on 30 June.......... (whether as members of the firm of..................................................

      of........................................... or separately) (g)

      Dated:

      (Signed) (h)........................................

      I,.............................................................of.........................................................the auditor.

(j).................................................................................................................

      to audit the trust accounts under section 184 of the Legal Profession Act 1993 certify that so far as disclosed by my audit of the trust accounts, the above statement correctly presents the information required to be shown.

      Dated:

 

(Signed)................................................

 

      * The alternative form is to be used where there are separate trust accounts of one or more of the partners, in addition to the trust accounts of the firm

¶    If the practitioner has received approval for the first audit report to include a period before 30 June 2006, this form should be amended as appropriate.

        .

      Explanatory Notes to Form 2

      (a) Name of bank, branch of bank and account number.  Repeat as necessary.

      (b) Detail on a separate page if necessary. Particulars required - date, name of payee, serial number and amount of cheque.

      (c) Details including date received and date banked.

      (d) Details.

      (e) Total of paragraphs 1, 2 and 3 to agree.

      (f) Full name(s) of practitioner(s).

      (g) Omit words in brackets if not practising in partnership

      (h) All partners, directors, shareholders and participating employees must sign or where the practitioners have unanimously resolved to be bound by the signature of one of them, by that practitioner.

      (j) Full name(s) of practitioner(s).

 

FORM 3

      Regulation 10

AUDITOR’S REPORT

      I,..................................................................of..................................................................

      hereby certify:-

      1.  That this auditor’s report is signed in respect of the following practitioner(s):-

      ..................................................................................................................

      (list the full names of all practitioners intended to be covered by the report, including all incorporated practitioners) practising at the following address(es):-

      .................................................................................................................

(list all addresses at which the practitioners practise and covered by the Auditor’s Report)

      under the following names:-

      .................................................................................................................

      (list any name under which the practitioner(s) practise).

      2.  That I am an approved auditor within the meaning of Section 3 of the Legal Profession Act 1993.  I am the holder of the required degree and have completed, or have substantially assisted in the completion of, at least 2 audits in the last 3 audit years.

      3.  That in accordance with the said Act and the Regulations made thereunder, I have made an audit of the whole of the trust accounts, investments and securities of the practitioner(s), including any individually held, for the period of twelve months ending on 30 June ..........

      4.  That I do not, and have not during the period covered in this report, carried out any duties for or on behalf of the practitioner(s) other than duties in connection with the audit or duties allowed by the Regulations.

      5.  That I am not disqualified from auditing the trust accounts of the practitioner(s).

      6.  That in carrying out the audit I have -

      (a) ascertained that a trust bank account (or trust bank accounts) was/were/not kept by the practitioner(s) during the period covered by the audit;

      (b) made a test examination of the trust bank account(s) and statements relating to the trust bank account(s) of the practitioner(s) during the said period;

      (c) made a test examination of investments, securities and mortgages and of the registers relating thereto;

      (d) made a comparison -

        as at

        ...................................................................................

        on which day (or within one month thereafter) I visited the offices of the practitioner(s) without previous notice, and at the same time, examined the practitioner(s) trust accounts and the books and papers relating thereto; and as at the 30 June .........., being the last day of the period of audit,  between the liabilities of the practitioner(s) to the clients of the practitioner(s) and to the other persons in connection with the practice of the practitioner(s) as shown by the practitioner's trust account(s) and the balance(s) standing to the credit of the trust bank account(s) of the practitioners(s).

      7. That the practitioner(s) supplied me within a reasonable time with all such information and explanations as were required by me to enable me to carry out the audit.

      8. That there was not so far as shown by the audit at any time during the period of the audit any deficiency in the trust accounts of the practitioner(s) or

      That there was

      on.............................................................................a deficiency of $...................in the practitioner’s trust accounts and that the amount of the deficiency was restored on .............. .................. ..............................................

      Such deficiency arose in the following circumstances:-

 

    9. That so far as shown by the said audit the trust accounts of the practitioner(s) have/have not been regularly kept and properly written up and in my opinion the accounting systems and records maintained by the practitioner(s) are/are not adequate having regard to the nature of the practice.    

10. That the practitioner has maintained a Register of Interests and a Register of Powers of Attorney and Estates and has/has not made entries in these registers during the period of the audit.     

11. That having made such checks and examined such files representative of every part of the practice of the practitioner(s) as I considered reasonable, I am of the opinion that the practitioner(s) has/have/not, during the period of the audit, kept accounting and other records of the kind that the practitioner is required to keep under the Act and has/has not complied with the requirements of the Act relating to how practitioners and firms handle trust money and of the Regulations made under the Act.

12. Trust bank account(s) operated by the practitioner during the audit year were:

      Name of Trust Account                Bank                      Trust Account no.

      (Insert details)

      I desire to bring to the notice of the Registrar the following additional matters:-

      (Here set out such additional matters as the auditor considers should be brought to the notice of the Registrar).

 

      Dated:

      (Signed)............................................


 

FORM 5

REGISTER OF INVESTMENTS AND SECURITIES

      Regulation 19

 

      (a)  The name of the person for whom the investment is made or the security  held:-

      (b)  The date upon which the investment is made or security received:-

      (c)  The amount of the security or investment (see also below for record of movements).

      (d)  Interest rate (see also below for record of interest received).

      (e)  Details (including the cheque number or other means of identification) of the payment whereby the investment was made:-

      (f)  A description of the investment or security:-

      (g) The date on which the security was delivered or the investment redeemed:-

      (h)  Details of disposal of the security or redemption of the investment.

 

      Record of Movements of security or investment

 

      Record of interest received

 

 

Notified Gazette No. 29, 27 June 2008.

Commenced on gazettal (27 June 2008).

Printed on the authority of the Administrator.

 

© Norfolk Island Government 1 July 2008

The Copyright Act 1968 of the Commonwealth of Australia permits certain reproduction and publication of this legislation.  For reproduction or publication beyond that permitted by the Act, written permission must be sought from the Legislative Counsel, Administration of Norfolk Island, Norfolk Island, South Pacific 2899.