I’ve been providing bookkeeping services to conveyancers now for several years, and have witnessed the transition from desktop software and paper forms to eConveyancing and cloud based practice management software. In fact I worked in the conveyancing and legal industry 20 years ago and the changes from then to now have been substantial.
In 2018, Deloitte made the prediction that by 2022 there would a big shift towards cloud based subscription practice management software (see graphic below). That is certainly proving to be true, with a little bit of extra help from COVID-19 to push this trend along as well.
CATS Trust Accounting Software
CATS is a “complete practice management system written by conveyancers for conveyancers”. It was initially created in 2005 by a conveyancer who used it as a tool to run his own firm. The name CATS is derived from Conveyancing and Trust Account System.
It’s one of the software programs I’ve seen make the move to going 100% cloud-based. Making life easier for conveyancers and their staff – and also much easier for bookkeepers, accountants and auditors.
Over the years I’ve picked up a few tricks and tips along the way and I’d like to share 8 tips for a successful CATS trust account reconciliation. You might be thinking that I’m doing myself out of clients by freely sharing my “tricks of the trade”, however I believe that if a business owner is ready to outsource their bookkeeping, they’ve already weighed up the pros and cons carefully and know that outsourcing is the best option for them.
So this is for the conveyancers and conveyancing staff that are still doing their CATS trust accounting and bookkeeping themselves.
8 Tips for Successful CATS Trust Account Reconciliations
Sort your list of transactions by amount before you start ticking off items. Especially helpful when you’re reconciling Payments, as this tends to be a longer list to scroll through than deposits.
Tick off bank statement amounts with a pencil or pen at the same time as you tick off the amount in CATS. This reduces the risk of losing your place and having to start from the beginning. It also makes it easier to go back and find what you’ve missed, in the event that you get to the end of your reconciliation and have a discrepancy. If you’re working off of a PDF copy of your bank statement, you can highlight the amounts instead of ticking.
Circle any items that are on your bank statement but that you can’t reconcile in CATS. For example, if the amount is missing altogether in CATS, or is for a different amount. Then you can come back at the end and easily work through your discrepancies.
You don’t have to reconcile a whole month in one go. There are several scenarios where reconciling a couple of days or a couple of weeks at a time is a good idea. For example, you may have a lot of transactions and attempting to do a whole month’s worth in one go can be overwhelming. You may be new to reconciling trust accounts, or new to CATS software. You might find that doing a smaller amount every couple of days suits you better or gives you greater peace of mind than knowing you have one big job to do at the end of the month.
If you have 1 figure in CATS that matches the total of 2 or more figures in your bank statement (or visa versa), then make a note of this next to the amount on your bank statement.
Keep thorough notes of any discrepances. If you find you have a lot of transactions that make up your “Adjustments” figure, consider using an Excel spreadsheet so that the total of your discrepancies is automatically added up and therefore leaves less room for error. At a minimum, I ensure I have the date, the amount and the payor or payee. Ideally I will know the file number as well and be able to note that (sometimes this isn’t possible, for example a deposit may be made into your trust account and you won’t know who it was received from or what it was for). I also go the extra step and make a note of what the issue is and, if I can, what date it was fixed.
When finished, check that the amounts on the first page of your Trust Account Reconciliation report do in fact match the totals of the other 3 pages of your report – the Trust Account Ledger Balances list, the Unpresented Cheques list and the Outstanding Deposits list. There have been rare instances of these amounts not matching up – so taking the extra time to check these amounts now can save you a whole lot of headaches and time later.
Save electronic copies of your reports in well-named folders that will be easily accessible come audit time and in the event that someone has to dig back through previous reports for information. Don’t forget to back-up these folders somewhere safe.
Should I get a bookkeeper to do my CATS trust account reconciliations?
After reading the above tips, you may be thinking that reconciling your own CATS trust account correctly is too difficult or too time consuming.
The clients that have outsourced their trust account reconciliations to Festival Bookkeeping, have done so for some of the following reasons:
They’ve been picking up errors whilst doing their own trust accounting reconciliations, but don’t have the time to work through those errors and track down which files they relate to, or how the problem came about. Outsourcing to a bookkeeper who specialises in CATS trust account bookkeeping means a fresh set of eyes are looking over the figures – picking up problems early and being able to easily track down the information needed in order to fix the problems.
The conveyancing firm has grown to the point that doing the trust account reconciliations themselves is no longer viable. They’re losing time and money by continuing to do it themselves, when an experienced CATS trust account bookkeeper can step in and do it quickly and efficiently.
3. Deadline Management
Conveyancers often have other priorities – they need to get their settlements across the line for their clients and are often working to tight deadlines. Whenever another month goes past and the trust account reconciliation has been put on the “backburner” again, there’s a huge weight added onto their shoulders. Handing over their CATS trust account reconciliations to our firm has removed that weight. Their trust account is now on OUR calendar, and we help keep everything moving along, as it should, so that when audit time rolls around everything is ready to go.
These are some of the things you need to weigh-up when deciding whether to continue doing your trust account reconciliations yourself, or whether you should be outsourcing to a bookkeeper. As with any outsourcing, you should ensure the firm you’re outsourcing to has experience in your particular area of bookkeeping. Trust account bookkeeping is a specialised area, and not all bookkeepers have been exposed to the nuances and regulations of the conveyancing industry and trust accounting.
About the author
Sarina Abbott started her bookkeeping firm Festival Bookkeeping in 2015. She’s a registered BAS Agent, Xero adviser and self-confessed numbers nerd. She’s been sharing her bookkeeping tips via The Savvy Bookkeeping Blog since 2013. You can find out more about Festival Bookkeeping here: