Direct answer: A dependable monthly IOLTA close has five stages: freeze the period, collect the bank statement and internal ledgers, reconcile the adjusted bank balance to the trust journal and client-ledger total, investigate every exception, and preserve a reviewed packet. Do not force the numbers to agree with unexplained adjustments, and do not treat software completion as attorney approval.
Key takeaways
- Set one cutoff date and confirm the complete source bundle before calculating.
- Resolve or clearly carry forward outstanding items with evidence.
- Review negative client balances and unidentified funds separately from the math.
- Keep a signed or otherwise attributable approval record for the exact final version.
Before calculating
Confirm that the statement covers the full month and belongs to the correct trust account. Export the trust journal through the same cutoff date and produce a complete client-ledger balance listing. Record the source filenames, generation dates, opening balances, and whether any late entries are expected.
A missing page, partial ledger export, or mismatched period should stop the workflow. Calculating on an incomplete bundle creates a polished answer to the wrong question.
- Bank statement and canceled-check or check-image support
- Trust account journal for the full period
- All client and matter ledger balances
- Prior month's completed reconciliation
- List of outstanding checks and deposits in transit
During reconciliation
Reconcile the bank activity first, distinguishing true timing items from missing or duplicate entries. Compare the adjusted bank balance with the trust journal. Then total the individual client ledgers and compare that independent total with both of the other balances.
Track each variance as an exception with an owner, supporting evidence, and status. A narrative such as 'timing difference' is not enough unless the packet identifies the transaction, amount, date, and expected clearing or correction path.
Review and retention
The reviewer should inspect the reconciliation, material outstanding items, negative or unusual client balances, unidentified funds, and any manual adjustment. The approving attorney should know which version is being approved and whether unresolved issues remain.
Retain the source bundle, calculations, exception register, reviewer notes, approval, and exports according to the jurisdiction's recordkeeping rules. This checklist is operational guidance, not a substitute for those rules.
Frequently asked questions
Can a bookkeeper prepare the reconciliation?
A trained bookkeeper or operator may prepare it, but responsibility and supervisory requirements depend on the jurisdiction and firm. The attorney should retain an explicit review and approval step.
What if the three balances do not match?
Do not approve the close. Trace the difference through source transactions, cutoff items, missing client allocations, duplicates, and opening-balance issues. Preserve the unresolved exception if it cannot be corrected immediately.
Sources and further reading
This article is operational education, not legal advice. Trust-account rules and retention requirements vary by jurisdiction. Confirm the requirements that apply to your firm and accounts.