Trust accounting standards

Athenty’s trust-accounting features (the trust ledger, the monthly trust comparison, the trust transfer requisition, the annual trust audit report) are built to the trust-accounting standards every Canadian law society requires. These standards are highly consistent across the country, so the app applies one coherent model and cites the governing rule for each jurisdiction here rather than naming any screen after a single province’s form.

Not legal advice — verify against your regulator

This page is a reference. Trust accounting is governed by your law society’s rules, and the details (deadlines, retention periods, reporting thresholds) vary by jurisdiction. Confirm the requirements that apply to your firm against your regulator’s current rules. Athenty applies the Ontario LSO By-Law 9 model as its primary standard because the other provinces’ rules are substantially similar — but the equivalents are listed below so you can check yours.

The standards Athenty applies

Standard	What it means	Where it shows up in Athenty
Pooled / general trust account	Client money received in trust goes into a designated trust account, separate from operating funds.	Trust accounts setup; the trust ledger.
Monthly trust comparison (reconciliation)	Each month, the trust bank balance is compared to the total held for clients; they must agree.	Monthly trust comparison report; reconciliations.
No client overdraft	A client’s trust ledger may not go negative — you can’t disburse more than that client holds.	Blocked on every trust posting by default. A gated, audit-logged admin override exists — see Negative trust balances.
Record retention	Trust records are kept for a set number of years.	Trust ledger retention policy (Settings ▸ Trust accounting).
Annual trust report	A periodic firm-level trust report / filing for the regulator.	The Trust Accounting Audit Report.
Shortfall reporting	A trust shortage must be made good and, in most jurisdictions, reported.	Surfaced when the monthly comparison doesn’t balance.

Thresholds and triggers vary

Some regulators set minimum or maximum thresholds or triggers for things like when a trust shortfall must be reported (e.g. a dollar amount, or “if not corrected within N days”) — and some do not. Athenty surfaces the shortfall; you should verify the specific reporting trigger your law society imposes.

Negative trust balances — what Athenty actually does

A client’s trust ledger going negative (a debit balance) is a trust shortfall. Athenty blocks it by default, but it does not pretend the situation never arises — debit balances happen in the real world (a bank error, an NSF cheque, a reversal, a correcting entry posted out of order), and the rules are explicit about what must then happen.

Here is exactly what the app does:

1. Blocked by default. Every trust posting is checked. If it would drive a matter’s trust balance below zero, it is rejected — the org setting Allow negative trust balances is off for a new organization.
2. Override is gated three ways. A posting that drives a balance negative can only be made if all three are true:
   • the organization has explicitly turned Allow negative trust balances on (Settings ▸ Trust accounting); and
   • the person posting is an owner or admin — no other role can; and
   • they supply a written reason for the override.
3. Every override is recorded on the transaction. The written reason and the user who overrode are stored on the trust transaction itself (negative_balance_override_reason / ..._by_id) and on the matter’s trust entry. The record is permanent and travels with the entry — an override is never silent, and it cannot be made without leaving that trace.
4. You must find and clear the negative yourself. Athenty does not currently give you a one-click “show me every matter in a debit balance” view, and the override is not yet pulled into a report. Until it is, the debit balance is visible on the matter’s own trust ledger, and it is your responsibility to clear it before the next reconciliation — see the warning below. (Surfacing overrides in a report is a known gap, tracked in #577.)

A permitted override is not a permitted negative balance

No law-society rule permits a client’s trust ledger to carry a debit balance. The override is an operational control — it lets you record what actually happened so the books tell the truth, and it leaves an audit trail. It does not make the negative balance compliant.

What the rules require is that a debit balance be made good immediately. Quebec states it most plainly: a lawyer “must make good without delay any debit balance in trust in a file, whatever the reason” (RLRQ c. B-1, r. 5, art. 60) — and may not withdraw more than the balance held for that file (art. 59). Ontario is to the same effect: a licensee may not withdraw from trust more than is held to the client’s credit (LSO By-Law 9 s. 9(3)).

So: any negative balance must be cleared before the next reconciliation is due. In Ontario the monthly trust comparison must be completed within 25 days of the month end (By-Law 9 s. 18 ¶8 / s. 22(2)) — the debit balance must be gone by then, not carried into it. Most other jurisdictions additionally require a shortfall over a set threshold to be reported to the regulator (BC > $2,500, AB > $2,500, SK > $1,000 — see the table below); Ontario sets no dollar threshold. Clearing the balance does not by itself discharge a reporting duty — check yours.

Governing rules by jurisdiction

The standard above, with the governing law-society rule + period for every province and territory. Ontario LSO By-Law 9 is the primary model; the rest are the equivalents.

Jurisdiction	Pooled trust acct	Monthly reconciliation (deadline)	No client overdraft	Retention	Annual report	Shortfall reporting
Ontario (primary)	LSO By-Law 9 s.7	s.18 ¶8 / s.22(2) — 25 days	s.9(3)	s.23 — 6 yr / 10 yr core records	By-Law 8 Annual Report (Mar 31)	report; no $ threshold (annual filing + spot audit)
British Columbia	LSBC Rules 3-58/3-60	r.3-73 — 30 days	r.3-63	r.3-75 — 10 yr	r.3-79 Trust Report (within 3 mo)	r.3-74 — > $2,500 or fraud
Alberta	LSA r.119.19	r.119.37 — end of next month	r.119.19	r.119.35 — 10 yr	r.119.38 Self-Report (Mar 31)	r.119.39 — > $2,500 or 7 days
Saskatchewan	LSS r.1506	r.1524 — 30 days	r.1512	r.1529 — 6 yr / 10 yr	Form TA-3 (within 3 mo)	r.1525 — > $1,000 / 3 days
Manitoba	LSM r.5-44(1)(a)	r.5-43(3) — end of next month	r.5-44(1)(f)/(g)	r.5-54 — 10 yr	Annual Member Report	duty to not overdraw (no $ trigger)
Nova Scotia	NSBS Regs Part 10	Reg 10.4 — ~30 days	Reg 10.6.1	7 yr	Trust Account Report (Reg 4.11.2)	Reg 10.6.3 — > $2,500 or 7 days
New Brunswick	Uniform Trust Account Rules r.1	r.2(2)(a) — 30 days	r.4(2)	r.2(2)(b) — 7 yr	Member’s Annual Report (Form 1)	r.5 — immediate
NL · PEI	Uniform Trust Account Rules (Atlantic)	monthly	yes	~7 yr	annual member/trust report	report
Yukon · NWT · Nunavut	territorial law-society trust rules	monthly	yes	per territorial rule	annual report	report
Quebec (distinct)	RLRQ c. B-1, r. 5 arts. 35, 50 (notaries: Chambre des notaires)	arts. 40–41 — monthly accounting report per trust account	arts. 59, 60 — no withdrawal above the file’s balance; any debit balance made good without delay	arts. 31–32 — 7 yr	art. 42 — account to the Barreau at least annually	art. 60 — make good without delay

Quebec and the territories

Quebec is a civil-law regime — lawyers are governed by the Barreau du Québec under the Règlement sur la comptabilité et les normes d’exercice professionnel des avocats, RLRQ c. B-1, r. 5 (notaries by the Chambre des notaires under their own equivalent), with different forms and the Code of Civil Procedure. The territories (YT, NT, NU) each have their own law-society trust rules. The concepts (monthly reconciliation, retention, an annual report) map across, but the citations and forms differ — verify against the relevant regulator.

Sources & authorities

Each jurisdiction above links to its regulator. The primary texts behind the table — linked to the official source.

Reviewed and approved by counsel — 2026-07-12

The trust citations on this page were reviewed and approved by counsel on 2026-07-12 (#577 c.64828), including the negative-balance treatment described above.

Approval covers the citations — it is not legal advice to your firm, and it does not freeze them. Trust rules change; verify against your regulator’s current rules before you rely on them.

• Ontario — LSO By-Law 9 (Financial Transactions and Records) · LSO By-Law 8 (Reporting and Filing Requirements)
• British Columbia — Law Society of BC Rules, Part 3 (trust accounting)
• Alberta — Rules of the Law Society of Alberta, Part 5 (trust)
• Saskatchewan — Law Society of Saskatchewan Rules, Part 15
• Manitoba — Law Society of Manitoba Rules, Part 5
• Nova Scotia — NS Barristers’ Society Regulations, Part 10
• New Brunswick — Law Society of New Brunswick, Uniform Trust Account Rules
• Newfoundland and Labrador — Law Society of NL · PEI — Law Society of PEI
• Territories — Law Society of Yukon · Law Society of the Northwest Territories · Law Society of Nunavut
• Quebec — Règlement sur la comptabilité et les normes d’exercice professionnel des avocats, RLRQ c. B-1, r. 5 — trust authority art. 35; deposit without delay art. 50; monthly accounting report arts. 40–41; accounting to the Barreau art. 42; no withdrawal above the file balance art. 59; debit balance made good without delay art. 60; retention 7 yr arts. 31–32 · Barreau du Québec · Chambre des notaires du Québec
• National model — Federation of Law Societies of Canada (Model Rules)

Why the screens use general names

You’ll notice the trust screens use general names — “Trust Accounting Audit Report,” “Monthly Trust Comparison,” “Electronic Trust Transfer Requisition” — rather than a specific province’s form number. That’s deliberate: Athenty serves firms across Canada, and the underlying standard is the same everywhere. The specific governing rule for your jurisdiction is cited here, so a screen never has to imply the app is for one province only.