01/09/2026
⚖️ WHY MUST LAW FIRMS APPOINT AN AUDITOR?
On 17 August 2026, the Legal Practice Council issued an important notice reminding legal practitioners that any auditor appointed to prepare and submit a trust-account audit report to the LPC must:
✅ be duly registered with the Independent Regulatory Board for Auditors (“IRBA”);
✅ be authorised to perform audit and assurance work;
✅ be authorised to submit reports to the LPC; and
✅ remain in good standing with the IRBA.
The LPC specifically warns that appointing an accountant or auditor who does not meet these requirements may leave the legal practice non-compliant with the Legal Practice Act 28 of 2014 (“LPA”) and expose the practitioners concerned to serious regulatory consequences.
Importantly, this notice does not create a new audit obligation or introduce a new filing date. It reinforces duties that already exist under the LPA, the LPC Rules and the Code of Conduct.
WHO MUST APPOINT AN AUDITOR?
The obligation applies to a trust-account practice. This ordinarily includes:
• an attorney practising as a sole practitioner;
• attorneys practising in partnership;
• an incorporated legal practice; and
• a trust-account advocate practising under section 34(2)(b) of the LPA.
Rule 54.20 requires the firm, at its own expense, to appoint an auditor once in every calendar year, or at any other interval required by the LPC, and to pay the audit costs involved. Note that an employed attorney does not have to appoint a separate auditor merely because that attorney works for the firm. However, every sole practitioner, partner, director and trust-account advocate remains responsible for ensuring that the practice complies with the accounting rules.
Responsibility cannot simply be delegated to a bookkeeper, and then forgotten.
CAN A LEGAL PRACTITIONER KEEP THEIR OWN BOOKS?
Yes – but there is an important distinction between bookkeeping and the statutory audit.
The LPA and the LPC Rules do not expressly require an outside professional accountant to capture every transaction or maintain the firm’s day-to-day books. A practitioner may:
• maintain the records personally;
• employ a competent bookkeeper; or
• outsource the bookkeeping function to an accountant.
However, outsourcing the bookkeeping does not outsource the practitioner’s legal responsibility. The firm must still ensure that its accounting records are proper, accurate, supported by source documents, updated and balanced monthly. Trust money must remain separate from business money, monthly reconciliations must be performed, and adequate controls and audit trails must exist for electronic payments and transfers.
What the practitioner cannot do is audit their own practice. The prescribed LPC report is an independent reasonable-assurance engagement. It must be conducted and signed by an appropriately registered auditor.
A Chartered Accountant is not automatically authorised to sign an LPC trust-account report. The individual must also be registered with IRBA as a Registered Auditor and must have the appropriate assurance status. An auditor performing assurance work must additionally be linked to a registered audit firm.
WHAT SHOULD A LAW FIRM DO BEFORE APPOINTING THE AUDITOR?
The practice should verify both:
1. the individual auditor’s IRBA registration number and status; and
2. the audit firm’s registration and authority to perform assurance work.
The verification should be done through IRBA’s public “Find an RA” facility. Firms should keep dated proof of the search, obtain a written engagement letter and confirm who will sign the final report. Registration should ideally be checked again before the report is signed and submitted.
WHAT MUST BE PREPARED AND SUBMITTED?
The LPC Rules and prescribed Schedule 8 process require the annual submission to include the following principal documents:
1. The Independent Auditor’s Reasonable Assurance Report on the Legal Practitioner’s Trust Accounts
This is commonly called the “trust audit report”. It is not merely the firm’s tax return or ordinary annual financial statements. It addresses whether the firm’s trust-account records and controls complied, in all material respects, with the LPA and LPC Rules.
The report must identify the individual Registered Auditor, the IRBA registration number and the registered audit firm.
2. The Legal Practitioner’s Annual Statement on Trust Accounts
This statement is the practitioner’s responsibility and must ordinarily accompany the auditor’s report. It includes information relating to the practitioners applying for Fidelity Fund Certificates, trust balances and trust creditors, monthly bookkeeping, office and branch details, section 86 interest, shortages or debit balances, FICA-related representations and changes to the practice’s partners or directors.
3. Applicable supporting schedules
Depending on the practice, this may include prescribed schedules dealing with section 86(2), 86(3) and 86(4) interest, separate trust banking accounts, investment records, bank charges and other matters called for by the current form.
The underlying trust cashbooks, ledgers, bank statements, monthly reconciliations, trust-creditor lists, investment schedules, client mandates, payment authorities, EFT audit trails and supporting vouchers must be supplied to the auditor and retained by the practice. They are not necessarily all filed routinely with the LPC unless the prescribed form or the LPC requires them.
WHAT ARE THE DEADLINES?
An established practice must ensure that its report reaches the LPC within six months after the annual closing of its accounting records.
A new firm must submit its first report within six months after commencing practice, covering the first four months of its operation.
When a practice closes, additional notice and final-reporting duties apply. The Rules require, among other things, a final auditor’s report and information concerning trust creditors and remaining trust balances within the prescribed closure period.
An exemption of these requirements may be applied for in accordance with Rule 54.26. It may be granted only in exceptional circumstances and on alternative evidence satisfactory to the LPC. Firms should therefore never assume that inactivity, a dormant trust account or the absence of client money automatically excuses an audit report.
WHY IS THE AUDIT SO IMPORTANT?
Trust money does not belong to the law firm. It may represent a client’s property deposit, settlement proceeds, deceased-estate funds, litigation award, maintenance money or money held for transfer to another party.
The Code of Conduct requires an attorney to account faithfully, accurately and timeously for money or property received, held or controlled for a client or trust creditor.
A properly conducted independent audit helps to:
• identify shortages, incorrect transfers and weak internal controls early;
• protect clients and trust creditors;
• protect honest practitioners from internal fraud or employee misconduct;
• support the issue of Fidelity Fund Certificates;
• reduce the risk of claims against the Legal Practitioners Fidelity Fund; and
• preserve public confidence in the profession.
A timely and compliant report may also support a separate application to the Legal Practitioners Fidelity Fund for reimbursement of qualifying trust-account bank charges and audit fees. The refund application is a separate process and must not be confused with the audit-report submission itself.
WHAT HAPPENS IF THE FIRM DOES NOT COMPLY?
Possible consequences include:
⚠️ an administrative fine or misconduct proceedings;
⚠️ difficulty obtaining or renewing Fidelity Fund Certificates;
⚠️ an inspection of the practice’s accounting records;
⚠️ direct reporting by the auditor of an unresolved query, deficit, irregularity or refusal of access;
⚠️ appointment of a curator over the trust accounts; and
⚠️ suspension or striking-off in sufficiently serious cases.
Recent public judgments demonstrate that missing, manipulated or unreliable audit and accounting records can rapidly become questions of whether a practitioner remains fit and proper, as was the legal question in South African Legal Practice Council v Kader, decided on 6 August 2026. The practitioner was struck from the roll after a broader and prolonged pattern of non-compliance that included failure to submit audit reports within the prescribed periods and unresolved trust-account discrepancies.
This recent judgment does not mean that every honest clerical mistake will automatically result in striking-off. Courts consider the seriousness and duration of the conduct, whether dishonesty or client prejudice is present, the practitioner’s cooperation and whether the problem was promptly and transparently corrected. However, repeated non-compliance, concealment or refusal to cooperate can transform an accounting problem into a fitness-to-practise crisis.
DO NOT WAIT FOR YEAR-END TO BECOME COMPLIANT
Trust-account compliance is not a once-a-year exercise performed when the auditor arrives. It is a daily professional obligation.
Practices should review their auditor’s registration now, reconcile their books monthly, strengthen payment controls, preserve supporting records and address any deficit or unexplained balance immediately.
HOW EHLERS FAKUDE INC. CAN ASSIST
Established in 1963, Ehlers Fakude Incorporated brings more than six decades of legal experience to the matters entrusted to us. Our reputation is built on practical legal knowledge, professional accountability, responsive service and a commitment to guiding clients through complicated legal and regulatory processes.
We can assist legal practices and practitioners with:
• interpreting LPC notices, the Legal Practice Act, the Rules and the Code of Conduct;
• identifying legal and regulatory compliance gaps;
• administration of deceased estates;
• registration and management of trusts;
• estate planning;
• notarial services;
• conveyancing;
• property sales (including marketing of the sale of immovable properties);
• general litigation.
We publish legal updates because informed practitioners protect their clients, informed clients protect their rights, and a properly regulated profession strengthens public confidence in the administration of justice.
EHLERS FAKUDE INC.: Legal experience. Practical solutions. Professional accountability.
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This publication provides general legal information and does not constitute audit, accounting or legal advice.
