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. Where you are offered the override. Every screen that can move trust money out now offers the same prompt — it names the date the balance first goes below zero and the projected shortfall, takes your written reason, and retries the exact same entry:

   • the matter’s Trust tab — recording a payment, reversing an entry, correcting an entry, moving funds to another matter, and moving a client’s funds between two of the firm’s trust accounts;
   • Accounting ▸ Trust Operations — a multi-matter cheque, a reversal, and both bulk transfer screens (matter-to-matter and account-to-account);
   • trust transfer requisitions — posting a signed requisition, and the sub-threshold payment that approves and posts in one step;
   • redirecting a loan’s held funds to another matter.

   On the transfer screens (matter-to-matter, account-to-account, and both bulk versions) the prompt only appears for someone who could actually use it — an owner or admin in a firm that has switched Allow negative trust balances on. Everyone else sees the same refusal they saw before, word for word, rather than being asked to justify something that would be refused anyway. On the other screens the prompt appears and then explains, in place, why a particular person or firm cannot proceed.

5. 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 para. 8 / s. 22(2)) — the debit balance must be gone by then, not carried into it. Most other jurisdictions additionally require a shortfall to be reported to the regulator, some only once it exceeds a set dollar threshold — those thresholds are not asserted here because they could not be confirmed at source, so verify the trigger with your regulator (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 para. 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, Part 3 Div. 7 — rr. 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 — reportable; threshold verify with your regulator
Alberta	LSA Rules, Part 5 — Trust Safety, 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 — reportable; threshold verify with your regulator
Saskatchewan	LSS Rules, Part 15 — Accounting, r. 1506	r. 1524 — 30 days	r. 1512	r. 1529 — 6 yr / 10 yr	Form TA-3 (within 3 mo)	r. 1525 — reportable; threshold verify with your regulator
Manitoba	LSM Rules, Part 5 Div. 4 — Financial Accountability (rr. 5-41 to 5-56), 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; trigger verify with your regulator
Nova Scotia	NSBS Regulations, Part 10 — Trust Accounts	Reg 10.4 — ~30 days	Reg 10.6.1	7 yr	Trust Account Report (Reg 4.11.2)	Reg 10.6.3 — reportable; threshold verify with your regulator
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
Newfoundland and Labrador	Law Society Rules, Part V — Uniform Trust Account Rules	verify with your regulator	verify with your regulator	verify with your regulator	verify with your regulator	verify with your regulator
Prince Edward Island	Law Society of PEI — trust accounts (regulator page only)	verify with your regulator	verify with your regulator	verify with your regulator	verify with your regulator	verify with your regulator
Yukon	Law Society of Yukon Rules, Divisions 16–17 (trust money)	verify with your regulator	verify with your regulator	verify with your regulator	verify with your regulator	verify with your regulator
Northwest Territories	Law Society Rules Consolidation (2024-10-07) — trust rules	verify with your regulator	verify with your regulator	verify with your regulator	verify with your regulator	verify with your regulator
Nunavut	LSN Consolidated Rules (2022-08-30) (regulator source only)	verify with your regulator	verify with your regulator	verify with your regulator	verify with your regulator	verify with your regulator
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

PEI and Nunavut — regulator only, deliberately

For Prince Edward Island and Nunavut the table links to the regulator and stops there. Their operative trust rule could not be confirmed at source, so this page gives no section number for them rather than a plausible-looking guess — a wrong citation is worse than a missing one. Confirm the rule with the Law Society of PEI / the Law Society of Nunavut directly before you rely on it. The same applies to every cell above marked verify with your regulator.

Ontario’s annual filing is By-Law 8 — not “Form 9”

The Ontario annual filing is the By-Law 8 Annual Report (Part II — Annual Report Filing, due 31 March). It is a By-Law 8 obligation, not a “Form 9”: under By-Law 9, Forms 9A / 9B are the electronic trust transfer requisition and the Teranet authorization — a different instrument entirely. Athenty’s Trust Accounting Audit Report supports the annual filing; it is not itself a regulator form.

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 section numbers — verified against the 2017 consolidation

The Ontario provisions in the table (s. 18 para. 8 for the monthly comparison, s. 22(2) for the 25-day deadline, s. 9(3), s. 23) were re-read at source on 2026-08-23 against the official LSO text whose consolidation is current to 27 April 2017 (By-Law 9, official PDF).

By-Law 9 was amended 27 May 2021 (in force 1 January 2022) (LSO summary of the amendments). Whether those amendments renumbered the s. 18 paragraphs could not be confirmed at source. The section numbers here are correct for the 2017 consolidation; check them against the current text before relying on them.

Two notations you may have seen in older Athenty releases — “By-Law 9 §10” and “By-Law 9 §18(10)” — were both wrong and have been retired. s. 18 is an unsubsectioned list, so “18(10)” is not valid notation at all; its para. 10 is the bank-statement/cashed-cheque/deposit-slip record, and s. 10 is the manner of withdrawing money from trust. Neither is the monthly comparison.

• 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 Safety (r. 119.19)
• Saskatchewan — Law Society of Saskatchewan Rules, Part 15 — Accounting
• Manitoba — Law Society of Manitoba Rules, Part 5 Div. 4 — Financial Accountability (rr. 5-41 to 5-56)
• Nova Scotia — NS Barristers’ Society Regulations, Part 10 — Trust Accounts
• New Brunswick — Law Society of New Brunswick, Uniform Trust Account Rules
• Newfoundland and Labrador — Law Society Rules, Part V — Uniform Trust Account Rules
• Prince Edward Island — Law Society of PEI — trust accounts (regulator page only — operative rule unconfirmed at source)
• Yukon — Law Society of Yukon Rules, Divisions 16–17 (trust money)
• Northwest Territories — Law Society Rules Consolidation (2024-10-07)
• Nunavut — LSN Consolidated Rules (2022-08-30) (regulator source only — operative trust rule unconfirmed at source)
• 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.