By: Keith Hill Jr.
Remote deposit capture, also known as RDC, is a technology that allows cheques to be deposited remotely into bank accounts without physically visiting a bank. This technology has proven beneficial for many people, especially lawyers. With RDC, save time and energy, as users can deposit cheques using their smartphones or other electronic devices. However, as we will examine in this article, there are certain requirements that must be met to ensure that the transaction is properly recorded, and the associated documents are retained, according to the Law Society.
From a books and records perspective, lawyers who use RDC to deposit cheques must add the client details to each deposit slip and maintain the slips as original source documents with their financial records. Specifically, lawyers must record the following information on the deposit slip:
· The date the funds were deposited
· The lawyer or paralegal’s law firm or legal services firm name (if it is not preprinted)
· The lawyer or paralegal firm’s bank account number (if it is not preprinted)
· The source of each receipt
· The name of the client associated with the cheque deposit
· The amount deposited
It is important to note that a deposit slip is not automatically created using a mobile RDC application. However, an original source document with the required information could be provided through the mobile RDC application’s deposit transaction history.
While some mobile RDC applications include a memo field that lawyers can use to enter information about the cheque being deposited, the memo field may be limited in length or character count. As a result, lawyers should be careful to record all required information on the deposit slip or transaction history record.
To create an original source document, lawyers can use the transaction history from the mobile RDC application to gather the required information. The deposit transaction history will contain most of the information lawyers are required to record on the deposit slip, which lawyers can print out or maintain as an electronic copy. Any required deposit slip information identified above that does not appear on the transaction history record (i.e., source of receipt, client name, etc.) should be added to the record and then filed.
Under Part V of By-Law 9, lawyers are required to maintain cheque deposit transaction source documents and make them accessible for ten (10) full fiscal years for both trust account and general account deposits. Therefore, lawyers should confirm with their financial institution how long the transaction information will be stored in the mobile RDC application deposit history logs, as some financial institutions impose time limits on a user’s ability to access this information.
Lawyers should retain the original deposited cheques until they reconcile that month's trust or general bank accounts. Cheques deposited using a mobile RDC application should be copied or scanned in PDF format for future reference. In addition, lawyers should be mindful of their remote deposit financial institution’s agreement requirements on deposit cheque retention, protection, and destruction.
Furthermore, it is crucial for lawyers to ensure that their client's information is kept confidential and secure. This means that lawyers should use a secure internet connection when using RDC and ensure that their mobile devices are password-protected and encrypted. Lawyers should also be aware of the risks associated with using public Wi-Fi networks, which are often not secure and can put their clients' information at risk.
In conclusion, RDC has made banking more convenient for lawyers. However, it is important to follow the necessary requirements to ensure that the transactions are properly recorded, and the associated documents are retained. By following these guidelines, lawyers can take full advantage of the benefits of RDC while minimizing risks and maintaining compliance with the regulations.
Keith Hill Jr. is the Principal at Bookkeeping Matters Inc (BMI). For over a decade, Bookkeeping Matters has been fulfilling bookkeeping needs for lawyers throughout Ontario and other provinces. As a former Legal Accounting professor, Keith has also positioned BMI as a premier provider of online legal accounting training. Specializing in several practice management software, Keith and his team can be contacted at: email@example.com / 1-800-893-2820 / www.BookkeepingMatters.ca
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