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Trust Account Reconciliation Made Easy: A Monthly Guide for California & Indiana Attorneys
Let’s be real—reconciling trust accounts is not the most exciting part of running a law firm. But if you mess this up? You could be looking at bar audits, fines, or even disbarment 
.
.That’s why we’re breaking down how to do your trust account reconciliation the right way—efficiently, accurately, and without the headache. We’ll also highlight California and Indiana’s trust accounting rules so you can stay compliant and stress-free.
Why Monthly Trust Account Reconciliation is Non-Negotiable
Skipping reconciliations or doing them “whenever you remember” is a fast track to trouble. Here’s why you need to make this a habit:
Catches errors before they become BIG problems – If there’s a miscalculation or an unauthorized transaction, you want to know ASAP, not six months later. Prevents bar complaints – California and Indiana both require strict compliance with trust account rules. If your numbers don’t match up, expect the bar to come knocking. Protects you from accidental mismanagement – Even if you’re not out here committing fraud, sloppy record-keeping can look just as bad if you’re audited. Gives you peace of mind – No one likes that pit in your stomach when you’re unsure if your trust account is balanced. Monthly reconciliations eliminate that stress.How to Reconcile Your Trust Account Like a Pro
Reconciliation = Comparing Three Numbers To be compliant, you need a three-way trust account reconciliation:
Bank Statement Balance – What your bank says is in the account. General Ledger Balance – Your law firm’s internal accounting record of the trust account. Client Ledger Balances – The total of all individual client accounts.At the end of the process, all three numbers must match. If they don’t, there’s a problem that needs fixing.
Step-by-Step Guide
Step 1: Gather Your Records- Latest bank statement
- General ledger (your firm’s internal tracking of all trust transactions)
- Client ledgers (detailed records of each client’s trust funds)
Step 2: Compare Your General Ledger to the Bank Statement- Match every deposit and withdrawal between the two.
- If something’s missing or doesn’t match, investigate immediately.
Step 3: Compare Your Client Ledgers to the General Ledger- The total of all client ledgers should match the general ledger balance.
- If it doesn’t, check for entry errors or missing transactions.
Step 4: Compare Client Ledgers to the Bank Statement- Add up all client ledger balances.
- If this doesn’t match the adjusted bank statement balance, something’s off.
Step 5: Fix Errors & Document Everything- Identify any mistakes, fix them, and document what happened.
- Save all records in case of an audit.
California’s Trust Accounting Rules: What You Need to Know
California doesn’t play when it comes to IOLTA compliance. Here’s what every attorney in the state needs to do:
Annual Trust Account Registration – Every attorney must register their trust account with the State Bar of California.
Mandatory Self-Assessment – You must complete a yearly self-assessment about how you manage client funds.
Detailed Record-Keeping Required – You must keep:- A written ledger for each client’s trust funds.
- Copies of all transactions (deposits, withdrawals, transfers).
- Monthly reconciliation reports.
Violations Lead to Serious Consequences – If the Bar audits you and finds missing records or errors, you could face fines, suspension, or worse. Full CA IOLTA Guidelines: calbar.ca.govIndiana’s Trust Account Rules: Key Takeaways
Indiana attorneys also need to stay on top of IOLTA regulations:
Mandatory IOLTA Accounts – Client funds that are nominal or held short-term must be placed in an IOLTA account.
Bank Requirements – Your IOLTA account must be at an approved financial institution that meets Indiana Supreme Court standards. Record-Keeping & Reconciliation – Just like California, Indiana requires:- Monthly trust account reconciliations.
- Accurate and detailed client ledgers.
- Copies of all trust account transactions.
Check Indiana Bar IOLTA Rules for Full Compliance: inbar.orgWhat You Should Do Every Month to Stay Compliant
To avoid trust account nightmares, here’s a simple monthly checklist:
WEEKLY TASKS:- Review all deposits & withdrawals – Make sure every client’s funds are accounted for.
- Update client ledgers – Don’t let records pile up or get sloppy.
MONTHLY TASKS:- Perform full three-way reconciliation (Bank Statement + General Ledger + Client Ledgers).
- Fix any discrepancies immediately – If the numbers don’t match, find out why before an audit happens.
- Double-check outstanding checks & deposits – Ensure they clear properly.
- Review compliance with your state’s IOLTA rules – Laws change, so stay informed.
Final Thoughts: Don’t Let Trust Accounting Stress You Out
Listen—trust account reconciliation doesn’t have to be overwhelming. But one mistake can cost you big time. If you’re feeling like you’d rather focus on being a lawyer and let someone else handle this, you’re not alone.
That’s why law firms trust Prestige Accounting and Consulting to make sure their trust accounts are accurate, compliant, and stress-free.
We handle trust account reconciliations for law firms so you don’t have to. We ensure full compliance with state bar rules (so you avoid audits & fines). We give you peace of mind so you can focus on what you do best—practicing law.
Let’s make trust account headaches a thing of the past. Book a free consultation today!
