The audit program is designed to test the system that safeguards entrusted funds.
North Carolina has operated a random trust-account audit program for decades. Its published handbook describes a focus on compliance with procedural and recordkeeping requirements, with authority to obtain the records needed to determine whether identified violations have been corrected.
The important operational point is that random selection can reach a firm without a complaint or other advance warning. The records, reconciliations, and evidence of oversight must already exist in a form that can be produced and explained.
A random audit tests whether normal operations produce a defensible record.
A trust balance alone does not explain who owns the funds, whether each transaction was authorized, or whether outstanding items were investigated. Those answers come from the journal, individual client ledgers, bank records, monthly reconciliations, and the documentation surrounding review and correction.
When those elements are maintained consistently, an audit is primarily an organized production exercise. When they are not, the firm may be forced to reconstruct months or years of activity under regulatory time pressure.
Readiness should be measurable before the audit notice.
Firm leadership should be able to verify that every trust account is reconciled, every client balance is supported, every exception has an owner, and every monthly review leaves a written trail. A periodic internal readiness check can expose gaps while the underlying records and institutional knowledge are still available.
The best response to random selection is a system that was already operating as if its work might be reviewed.
What firms should be able to produce and explain.
- A complete account inventory.Identify every general, dedicated, and fiduciary trust account maintained by the firm.
- Reconciliations that tie exactly.Confirm adjusted bank balances, journals, and total client-ledger balances agree for every required period.
- Traceable client balances.Support each balance with matter-level receipts, disbursements, and source documents.
- Resolved exceptions.Investigate negative balances, stale checks, unidentified funds, and unreconciled differences before they compound.
- Evidence of supervision.Retain the review, approval, correction, and escalation record—not only the final reports.