IOLTA Frequently Asked Questions
Q. As a lawyer, am I required to have an IOLTA account?
A. Maybe - lawyers are required to have an IOLTA account if they accept funds that belong in whole or in part to a client or third person. This determination is made at the time the lawyer receives the funds. See Rule 43, Ariz.R.Sup.Ct.
Q. Is there a special form or letter that I need to open an IOLTA?
A. Yes – you will need the Notification to Financial Institution to open the account. Once you have opened or closed an IOLTA, you will need to submit the Arizona Attorney Enrollment/Change form to the Arizona Foundation for Legal Services and Education.
Q: What records do I need to keep for my IOLTA?
A. You will need to keep the following IOLTA records for five (5) years after the representation of your client has ended:
- Bank statements;
- Cancelled checks (If you have online access of your account and can see the digital image you should download them each month);
- Duplicate deposit slips or the equivalent (a log or print out from your software of deposits);
- Individual client ledgers including the administrative ledger;
- General ledger/check register; and
- Bank reconciliation.
Q: What information is required on the client ledger?
A. Pursuant to Rule 43(b)(2)(B) Ariz.R.Sup.Ct. client ledgers must contain the following information:
- the date, amount and payor of each receipt of funds (this means who gave you the money and it may not always be your client);
- the date, amount and payee of each disbursement (to whom did you disburse funds); and
- any unexpended balance (how much is left for each client).
Suggested items to include:
- Description of transaction (why did you receive the money or disburse funds); and
- Type of transaction; deposit; electronic transfer, wire transfer, your check number, etc.
Q. What are the three parts of the 3-way reconciliation?
- Completed bank reconciliation (this provides your adjusted bank balance, accounts for any outstanding transactions);
- Total of all client balances and administrative funds combined;
- The ending balance on your general ledger/check register.
All three should be based from the ending date of the bank statement. This means if your bank statement ends on August 31, 2014, you should not include any transactions after that date. If all three of those balances match you have successfully completed the required monthly three-way reconciliation.
Additional IOLTA FAQs and Tips from the State Bar of Arizona.