October 1, 2002 Regular News Trust accounting: Which way works? Debra Moss Curtis All aspects of trust accounting are covered in Chapter 5 of the Rules Regulating The Florida Bar, 1 f rom the types of monies that should be kept in and out of the account, the requirements of what the records must contain and how long to retain them, to the accounting procedures themselves. All attorneys are held to a high standard in meeting these requirements.However, one aspect of trust accounting is not mandated by the Bar and remains a subject of considerable debate among many attorneys: whether records should be kept by hand or electronically. Each method of bookkeeping has its positive and negative qualities, leaving the individual law firm to evaluate for itself which method will allow the lawyer to best be able to comply with the requirements.Many lawyers use actual paper accounting books to keep track of trust accounts and other office accounts. While some view the reliance on paper and pencil as living in the technological dark ages, keeping books by hand has its advantages. First, it mandates having a full understanding of the rules, down to the letter — it would be impossible to keep the books properly by hand without such knowledge. Unlike a computer — which will often automatically tabulate and document — the process of writing your checks, deposit slips, and balances by hand requires a consistent conscious decision-making process. While burdensome to some, the affirmative act of manually writing information that complies with the trust accounting rules may help many attorneys ensure that the trust accounting requirements are in fact met.Second, many attorneys are simply wary of technology, with its potential glitches, failures and interruptions. For many, the physical presence of a checkbook equals peace of mind, knowing that their trust accounting book will always be safely locked up, protected against power failures, surges, or software scrambles.Third, for some law offices, converting to an electronic medium may require extensive retraining of staff. The trusted staff member or attorney who has efficiently handled the accounting may be uncomfortable with the technology of a program, but extremely proficient in the trust accounting rules. There are some cases where conversion to an electronic medium therefore could potentially slow down the accounting process.Fourth, many attorneys find it easier to differentiate between their operating accounts and trust accounts if they are physically separate entities. Having one checkbook for trust accounts and one for operating accounts — with each checkbook being of a different size, shape, and color, and kept in different locations — can help to ensure that there is no confusion between the two. This is of particular interest when considering the level of account integration that many electronic banking systems’ softwares provide.Last, some smaller law offices simply may neither own, nor have a current budget to buy, the required software or hardware necessary to convert a system to electronics. Small law firms doing very little work requiring trust accounting, such as will drafting where payment is received after completion of the document, may not be willing to invest the time and money to convert their rarely used accounting system to computers.However, there also are clear disadvantages to the paper method of accounting. The first, and most dangerous, is human error, which can cause an account to be “out of trust” in a hundred different ways, such as addition errors preventing reconciliation, return of checks for insufficient funds, or failure to meet minimum trust accounting records on either the checks, ledgers or deposit slips. 2 S imply adding a column of numbers wrong, or forgetting to itemize information on disbursement checks, ledgers, or journal pages can also result in being “out of trust.” 3 S ince the rules also require that lawyers authorize their IOTA financial institution to notify the Bar in the event of checks returned for insufficient funds, and since that event, or even something as basic as failure to file the trust accounting certificate, can trigger the Bar to order an audit, human error is no small matter. 4A second downside to paper accounting is that it is often more time consuming than computer-based accounting. If the person caring for the books has basic computer skills, the multifunction programs can automate many otherwise laborious tasks, saving an attorney or staff member considerable time in writing checks, and noting information in the multiple places required by the minimum trust accounting procedures. 5A third downside to paper accounting may be the vulnerability of the actual paper books. While many fear electronic failure, computerized records can often be backed up to many locations, while a paper trust accounting book is often the only entity containing information — theft, flood, fire, or other loss can cause devastating results.Last, the physical limitation of accessing the book may cause inconveniences. To do any accounting, you must have the actual — often bulky — ledger book with you. If your system is on a computer, you may be able to access your records from home, the courthouse, or any other location in which you have your computer. This may allow budgeting your time more efficiently through your working day.Today’s software programs can simplify accounting in ways that attorneys decades ago never dreamed of. Building on the same concepts as other banking e-programs, one set of keystrokes can transmit information to checks, journals, and ledgers, with guaranteed mathematical accuracy.Most attorneys who have computerized trust accounting gush at their computer programs’ automated features. Many accounting programs can print a check and then carry through the subsequent required documentation. In these systems, information such as the notation of debit on the client’s individual ledger “card” and the notation in the required journal, all with necessary information, such as identification of client, date, check number, and reason for payment, are automatically carried through to all necessary locations. 6 S ince an attorney can usually set up the programs to do these tasks in accordance with specific Bar rules, the lawyer can be assured that the rules are being followed, all while potentially saving enormous amounts of time.These programs also are quite appealing because of the ability to link trust accounting documents to operating accounts, carrying through a transaction, when necessary, to the proper tabulation of monies deposited to an operating account from that trust account. The simple, yet time-consuming, act of bookkeeping is streamlined by the use of computerized accounting programs.However, this streamlining may come with a price. Many attorneys place too much trust in the software itself. No program can automatically solve problems of compliance with the Bar rules — only an attorney can do that. An attorney must have a complete understanding of the requirements of the Bar rules before instructing a machine to take over the manual task of fulfilling them. Surely an attorney cannot be sure that a computer is doing its job if the lawyer is not exactly sure what that job is supposed to be.Second, many attorneys strive, in the interest of security, to keep their trust accounts and operating accounts as far away as possible from each other. For these lawyers, the mere thought of linking them — and the potential for commingling funds because of an electronic hiccup — is terrifying, as the consequences can be grave.Third, computers bring their share of electronic problems and potential security dangers. It may be easy to grab a trust accounting book when the building is on fire or a hurricane requires evacuation, but it may not be so simple when the trust account is kept on a desktop computer. As for security, a locked cabinet to which only one person has the key may ensure the sanctity of the trust accounting records, but a computer that may be accessible by others may be more troublesome.Finally, computerized trust accounting — much to the chagrin of some attorneys — does not mean paperless trust accounting. Those with computerized records should print their files monthly, to ensure both compliance with the rules and for security reasons. In addition, other written documents — such as bank statements, original cancelled checks and original or duplicate deposit slips — will still be part of your necessary records. 7 T hat may leave some finding it difficult to split their attention between paper and the computer.So which method should your law firm use? Only an individual firm, weighing its own needs, preferences, and situations against the potential benefits and downsides of each method, can truly make that decision. But remember: The method used is not as important as making sure that all trust accounting records comply with the Florida rules. Professor Debra Moss Curtis teaches Lawyering Skills and Values I and II at the Shepard Broad Law Center, Nova Southeastern University. She also teaches sales financing, on-line criminal procedure, and a workshop on law office management. 1 R. Regulating The Fla. Bar, Chapter 5 (2001). 2 R. Regulating The Fla. Bar 5-1.2 (2001). 3 R. Regulating The Fla. Bar 5-1.2(b) and (c) (2001). 4 R. Regulating The Fla. Bar 5-1.2 (c)(4) and (d)(1) (2001). 5 R. Regulating The Fla. Bar 5-1.2 (b) (2001). 6 R. Regulating The Fla. Bar 5-1.2 (b)(5) and (6) (2001). 7 R. Regulating The Fla. Bar 5-1.2 (b)(2) and (3) (2001). Practice Tips: Trust accounting: Which way works?
Carmen Puliafito resigned in March 2016.The former dean of the Keck School of Medicine engaged in drug use during his tenure at USC, hosted parties in his office and kept company with convicted criminals and an underage drug user, a Los Angeles Times investigation reported on Monday.Carmen Puliafito was named dean of Keck in 2007 and announced his resignation in March 2016, citing a return to academic ophthalmology and the pursuit of other professional opportunities.The Times interviewed six people who partied with Puliafito starting in 2015 while he was still dean, none of whom were USC students. Puliafito has not been arrested or charged with a crime, and has no criminal record. According to the Times, on March 4, 2016 — a few weeks before Puliafito’s resignation — he was present at a Pasadena hotel party with then-21-year-old Sarah Warren, who suffered a drug overdose that evening. In a series of interviews with the Times, Warren said she became affiliated with Puliafito in early 2015 when she was working as an escort. Footage the Times reviewed shows the pair doing drugs the night before Warren’s overdose. A call record from the Pasadena Fire Department published by the Times reveals that Puliafito called 911 after Warren became unconscious. In the call, he stated he was a doctor, referred to her as his girlfriend and said she had only ingested alcohol. The Times stated that a witness reported Warren’s overdose to Pasadena authorities and phoned USC President C. L. Max Nikias’ office on March 14, 2016. The University did not confirm reports of this phone call to the Daily Trojan. Puliafito resigned 10 days later, but is still listed as a faculty member on the Keck website. The University confirmed Puliafito was on sabbatical from his faculty position and is following all proper procedures to review his status in patient care. Since Puliafito is on leave, he is not currently seeing any patients. The Times also reviewed images of Puliafito partying with individuals with criminal records, as well as videos that suggest the former dean took drugs like ecstasy and methamphetamine. The photos were reportedly dated in 2015 and 2016 and showed Puliafito and his acquaintances partying in various locations, including in his office at the Health Sciences Campus. The Times also obtained a copy of a CVS prescription Puliafito wrote for Sarah Warren’s younger brother, Charles Warren, who was 17 at the time he met Puliafito. The prescription, the Warrens said to the Times, was for asthma inhalers that would alleviate the raw effects on their lungs from drug use.The University has lauded Puliafito as a strong leader and fundraiser as recently as last June, three months after his resignation. During Puliafito’s tenure, he oversaw the full accreditation of Keck and focused on increasing research and grants from the National Institute of Health. Last year, Keck was ranked 31st on the U.S. News and World Report of the nation’s best medical schools — a jump of eight places since the start of Puliafito’s deanship. Puliafito was also a witness in USC’s legal dispute with the University of California, San Diego about the rights to an Alzheimer’s research program. The Daily Trojan could not independently confirm the Times’ reporting. The University had no further comment beyond confirmation that Puliafito was not currently seeing patients and stated it was not at liberty to discuss personnel matters.“If the assertions reported in the July 17 Los Angeles Times story are true, we hope that Carmen receives care and treatment that will lead him to a full recovery,” the University said in an email to the Daily Trojan.