If your law practice held or received trust money at any point between 1 April 2025 and 31 March 2026, the annual trust compliance window is now open and the deadlines are not far away. Part A – the confirmation of trust money – is due by 30 April 2026. The External Examiner’s Report and Part B – the statement of trust money – are due by 31 May 2026. Neither deadline moves, and the consequences of missing them are not administrative inconveniences. They are regulatory events that carry real penalties and real scrutiny.
For most law practices, this is a routine annual obligation. But routine does not mean unimportant, and the number of practices that leave it too late to engage an examiner, or that discover recordkeeping issues only when the examination begins, is higher than it should be. If you have not yet appointed your external examiner for this year, or if your trust records are not in the shape they need to be, now is the time to address both.
What Is a Legal Trust External Examination?
An external examination is an independent review of a law practice’s trust records, conducted by an approved External Examiner under section 155 of the Legal Profession Uniform Law (NSW). It is not a full financial audit. It is a compliance examination focused specifically on whether trust money has been properly received, held, and disbursed in accordance with the Uniform Law and the Legal Profession Uniform General Rules 2015.
The examiner reviews your trust account receipts and payments, client trust ledger accounts, monthly reconciliations, trial balances, bank statements, client authorities for disbursements, controlled money accounts where applicable, and transit money records. The output is an External Examiner’s Report in the standard form prescribed by Rule 67, lodged through the Law Society’s Trust Lodgement Portal.
Every law practice that received or held trust money during the trust year must have its records examined. This applies regardless of the size of the practice, the volume of trust transactions, or the amount of money held. Sole practitioners and large firms alike are subject to the same requirement.
Key Deadlines for the 2025-26 Trust Year
The trust accounting year runs from 1 April to 31 March – not the standard financial year. For the year ended 31 March 2026, the deadlines are:
30 April 2026 – Part A (Confirmation of Trust Money). All principals must declare whether trust money was held or received during the year. This applies even if no trust money was held – the declaration is still required.
31 May 2026 – Part B (Statement of Trust Money) and the External Examiner’s Report. If trust money was held or received, the detailed statement and the completed examination report must both be lodged via the Trust Lodgement Portal by this date.
If your practice did not hold trust money during the year, you still need to lodge Part A by 30 April. You do not need an external examination or Part B.
Who Can Conduct the Examination
Under Rule 65 of the Uniform General Rules, eligible external examiners include members of Chartered Accountants Australia and New Zealand holding a current Certificate of Public Practice, members of CPA Australia with a Public Practice Certificate, members of the Institute of Public Accountants with a Professional Practice Certificate, and registered company auditors under the Corporations Act.
In addition to holding one of these qualifications, the examiner must have completed a Legal Services Council-approved External Examiner course conducted by the Law Society of NSW, the Law Institute of Victoria, or the Legal Practice Board of Western Australia. They must also be independent of the law practice being examined.
A law practice must appoint its external examiner in writing and notify the Law Society within 30 days of first receiving trust money, and within 7 days if an examiner ceases to act. If you need to find or change your examiner, the Law Society’s register of approved examiners is the place to start.
What the Examiner Is Looking For
The examination is structured around the trust account obligations set out in Part 4.2 of the Uniform Law and the General Rules. In practical terms, the examiner is reviewing whether:
- Trust money has been deposited into the correct trust account promptly on receipt
- Client trust ledger accounts are accurate and properly maintained
- Monthly reconciliations between the trust ledger and bank statements have been completed within 15 working days of each month end, as required by Rule 48
- Trial balances have been prepared monthly
- Disbursements from trust have been properly authorised by clients in writing
- Trust money has not been intermixed with general practice funds
- There is no deficiency in the trust account at any point during the year
- Controlled money and transit money records are complete and compliant
- Receipt numbering, ledger entries, and record-keeping meet the requirements of the General Rules
If the examiner identifies a deficiency or irregularity, they are required by law to report it to the Law Society. This does not automatically trigger disciplinary proceedings – genuine administrative errors are treated differently from deliberate mishandling – but it does mean the issue becomes a matter of regulatory record.
What Happens If You Do Not Comply
The penalties under the Uniform Law are not symbolic. Failure to have trust records examined carries a civil penalty of up to 50 penalty units, which in NSW currently amounts to $275,000. The same penalty applies to failure to report irregularities.
Beyond the statutory penalties, non-compliance can trigger disciplinary action by the Law Society, fines and formal warnings, suspension or cancellation of a practising certificate, and in serious cases involving misappropriation of trust funds, a practitioner being struck from the roll. Certain trust account issues are classified as automatic show cause events, requiring the practitioner to demonstrate their fitness to continue holding a practising certificate.
The Law Society may also appoint its own examiner to review a practice’s trust records at the practice’s expense if it is not satisfied that compliance obligations are being met.
Common Issues That Surface During Examinations
Most trust account examinations proceed without significant findings. Where issues do arise, they tend to fall into predictable categories: reconciliations not completed within the required 15-day window, disbursement authorities that are incomplete or missing, delays in depositing trust money received, ledger entries that do not match supporting documentation, and controlled money records that have not been maintained with the same discipline as the general trust account.
None of these are necessarily serious in isolation, but they create unnecessary risk and regulatory exposure. A practice that maintains its trust records properly throughout the year, rather than addressing them in a rush before the examination, will find the process straightforward and the outcome clean.
Recent Changes Worth Noting
From 7 January 2025, solicitors are no longer regulated under the Financial Transaction Reports Act 1988. Law practices no longer need to submit reports about significant cash transactions of $10,000 or more occurring on or after that date. This simplifies one aspect of the compliance burden, though it does not change the core trust account examination requirements.
The Law Society publishes updated compliance checklists and guidance each April. The 2025 Trust Compliance Checklist and FAQ document are worth reviewing alongside this guide.
Book Your External Examination Before the Window Closes
If your practice held trust money during the 2025-26 trust year and you have not yet arranged your external examination, the time to act is now. Part A is due by 30 April. The External Examiner’s Report and Part B are due by 31 May. Approved examiners are in high demand during this period, and leaving it to the final weeks creates unnecessary pressure on both the practice and the examiner.
Prime Partners director James Carey CA is a registered External Examiner with the Law Society of NSW, having completed the approved External Examiner course and conducted trust account examinations for law practices across Sydney and regional NSW for a number of years. We understand the specific requirements of the Uniform Law and the Law Society’s reporting framework, and we work with practices of all sizes – from sole practitioners to mid-sized firms.
If you need an external examiner for the 2025-26 trust year, or if you want to discuss your trust account compliance position before the deadlines arrive, we are taking appointments now.
Contact James Carey at Prime Partners to arrange your trust account external examination.
Frequently Asked Questions
This article is general in nature and does not constitute legal or financial advice. Law practices should consult their own advisers in relation to their specific trust account obligations.