Three-way Trust Reconciliation

A three-way reconciliation is the process of reviewing an IOLTA account and ensuring the funds are accurately reflecting transactions and a client has the most current information on the account. It is recommended a reconciliation is performed monthly though your state bar association will have a guide on when this needs to be completed.
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This will be completed in QuickBooks, so ensure you have access to view transactions and banking information.
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​The three components of the process:
- bank statement
- trust ledger
- client ledger
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1. Compare the bank statement with the trust ledger. If there are discrepancies: make corrections to reconcile the bank statement and trust ledger. Look for any deposits made after the statement closing date, withdrawals made or checks deposited after the statement closing date, and bank or transaction fees that were incorrectly charged to the account.
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2. Once the bank statement and trust ledger are in line, next compare the bank statement to the client ledger. Look for any pending transactions which can happen from receiving a check which has not been deposited or there is a delay in electronic processing. Correct any discrepancies by amending the statement.
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3. Regularly review the accounts to verify they are accurate and up to date. Best practices are to complete the process on a monthly basis on the same day to line up with the bank statement.
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