Client-money control: matter sub-ledgers, release approvals and reconciliation
Why offices holding third-party or escrow funds need more than a bank balance and a spreadsheet.
Executive summary
Client funds need matter-level records and segregation evidence.Release should require approval before execution.Reconciliation and shortfall remediation must be documented.Client money creates a different kind of risk: the office is holding funds that belong to someone else or are tied to a specific matter. That demands segregation, matter-level records, release approvals, reconciliation and evidence.
The key control is that book balances, bank balances and matter ownership stay aligned. Release should not happen without approval, shortfalls should escalate immediately and reconciliation should be signed off on a schedule.
Sceau’s client-money module is not bank-grade accounting, but it gives office-control grade evidence: who requested a release, who approved it, what balance was reconciled and how shortfalls were resolved.
Who this applies to
This guide is for offices that hold third-party, escrow, trust or client funds and need operational controls around them.
- Real-estate and escrow matters
- Notarial or legal client accounts
- Professional offices holding advances or settlements
- Teams reconciling bank balances against matter ledgers
- Offices needing release approvals
Legal and supervisory context
Client-money duties vary by profession and jurisdiction, but the control logic is consistent: know whose funds are held, keep them segregated, reconcile regularly and prevent unauthorised release.
The compliance risk is not only theft. It is also poor evidence: unclear matter ownership, stale reconciliations, missing approvals and unresolved shortfalls.
What the office must actually do
The office should turn the obligation into a repeatable workflow with named owners, deadlines, evidence and reviewable decisions.
- Create trust or client-money accounts.
- Record matter-linked entries.
- Require approval before release.
- Reconcile book and bank balance.
- Escalate shortfalls.
- Sign off reconciliations and remediation.
What good evidence looks like
The evidence should show balances, ownership, release requests, approvals, execution, reconciliation, shortfalls and resolution.
Common mistakes supervisors find
- Using one spreadsheet without approval history.
- Letting release and approval be the same action.
- Reconciling only when someone asks.
- Not escalating bank/book shortfalls immediately.
Practical checklist
- Create account.
- Record entries.
- Link matter owner.
- Request release.
- Approve separately.
- Reconcile bank statement.
- Resolve shortfalls.
- Maintains matter sub-ledgers.
- Controls release requests and approvals.
- Runs reconciliation checks.
- Raises shortfall triggers and assurance failures.
- Stores workpapers in the inspection pack.
FAQ
Is Sceau a bank ledger?
No. It is office-control grade evidence, not a replacement for bank accounting systems.
Why separate release approval from execution?
Segregation of duties reduces error and abuse risk.
What should happen with a shortfall?
Escalate immediately, investigate, record remediation and sign off resolution.
Official references
From knowledge to compliance
Reading is a start. Sceau turns these obligations into a workflow that runs itself and proves itself.
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