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How to fix common trust accounting errors

Even with the greatest of care, it is possible to make mistakes when entering trust transactions into ContactsLaw. Additionally, transactions thought to be correct at the time they were entered may require corrective action at some point in the future; for example, if a cheque bounces or funds are deposited into the wrong account. This article describes how to fix a series of common trust accounting errors.

Funds transferred from trust to general in error 

If a trust transfer should not have occurred (e.g. due to lack of authority or available funds, or funds were transferred from the wrong file), the following must be done to undo the transaction:
  1. If the trust transfer pays a bill, you will need to modify the allocations so that they do not pay any bills (right-click the TT and select the 'Modify allocations' command). If the command is not available (e.g. the GST period has been finalised), you must post a debtor adjustment to achieve the same goal.
  2. Post a debtor refund, specifying the trust bank account as the payee. This transaction returns the funds to the trust account.
  3. Post a trust receipt to record the above transaction on the trust ledger. The payment method should match that used for the refund.

Funds receipted on wrong date (where there is a subsequent payment) 

If a trust receipt is recorded on the wrong date, the normal procedure is to cancel the receipt and record a new transaction with the correct date. However, if the funds have been subsequently drawn upon, you will not be able to cancel the receipt immediately. Instead, you must:
  1. Post the new trust receipt first, ensuring the date is accurate.
  2. Cancel the erroneous receipt.
Note that this example assumes the payment occurs on or after the date the funds were actually received. If this is not the case, you will need to correct the payment as a separate matter.