Books and Records Policy

Purpose

The Law Society of Ontario's By-Law 9 requires every licensee to keep financial records of all money and other property received and paid out in their practice. This policy lists the records NEO keeps, how they are kept up to date, how long they are kept, and how electronic records are protected. It also covers the corporation's own records and its tax records.

Who it applies to

• The principal, who is responsible for NEO's books and records and signs the monthly trust comparison.
• Employees and any outside bookkeeper or accountant who enter or check records, always under the principal's supervision.
• Independent contractor paralegals, whose NEO client money is received and recorded only by NEO, as our Independent Contractor Paralegals Policy explains.

Trust records

For money we hold in trust for clients, we keep:

1. A trust receipts journal (what By-Law 9 calls a book of original entry): each amount received, the date, the method, who paid it, the purpose and the client.
2. A trust disbursements journal: each amount paid out, the date, the method and any reference number, who received it, the purpose and the client.
3. A clients' trust ledger: a separate account for each client, showing everything received and paid out and the balance.
4. A record of transfers between clients' ledger accounts, with the reason for each.
5. A monthly trust comparison: the total in our trust bank accounts compared with the total of all client balances, with the reason for any difference, supported by a list of what we hold for each client and a reconciliation of each trust bank account. It is signed by the licensee who prepared or approved it.
6. A record of any property other than money held in trust for a client.
7. Bank statements, images of cleared cheques and detailed duplicate deposit slips for every trust and general account.
8. Electronic trust transfer records: each electronic trust transfer requisition, signed before the transfer is made, and the bank's confirmation, which a licensee checks against the requisition, marks with the client, the matter and any file number, and signs and dates by the close of the next banking day after the confirmation is sent.

Only a licensee authorizes a withdrawal from trust, and only for the purposes our Trust Accounting and Client Money Policy allows.

General account records

1. A general receipts journal: all money the firm receives other than trust money, with the date, the method, the amount and who paid it.
2. A general disbursements journal: all money the firm pays out other than from trust, with the date, the method and any reference number, the amount and who received it.
3. A fees book or chronological file of every invoice, showing the fees and other amounts billed, the dates and the clients.

Other records

• Cash receipts book, if we receive cash, under our Cash Transactions and Anti-Money Laundering Policy.
• Referral fee records: the date, method and amount of each referral fee, the licensee who paid or received it and the client, with the signed referral agreement, under our Referral Fees Policy.
• Client identification records, under our Client Identification and Verification Policy.

Kept current

• Every record is entered as transactions happen, so the books are current at all times, and every entry is tied to a client and matter.
• The monthly trust comparison is completed within 25 days after the end of each month.
• A mistake in a posted entry is fixed with a correcting entry that shows what changed and why. A posted entry is not deleted or overwritten.

How long we keep them

By-Law 9 sets minimum periods, counted back from the firm's most recent fiscal year-end, so at any time we hold at least the full period before that date:

• At least 10 years: the trust receipts and disbursements journals, the clients' trust ledger, the monthly trust comparisons, the record of trust property, bank statements, cheque images and deposit slips for all accounts, and electronic trust transfer records.
• At least 6 years: the record of transfers between client ledgers, the general receipts and disbursements journals, the fees book or invoice file, the cash receipts book and referral fee records.
• Client identification records: for the longer of the client relationship (and as long as needed to serve the client) and six years after the work is completed, as By-Law 7.1 requires.

We keep a record longer when tax law, a legal hold or an open audit, complaint or claim requires it. When a record's period ends, it is destroyed securely, as our File Closing and Retention Policy explains. Money that can't be returned is dealt with under our Unclaimed Trust Money Policy, and its records are kept.

Electronic records and backups

By-Law 9 allows records and signatures to be electronic, as long as a paper copy can be produced promptly when the Law Society asks.

1. NEO's books are kept in the firm's secure practice system, and files are stored privately with Google Cloud.
2. Each person has their own login, access is limited to people who need it, and the system's audit log records who did what.
3. Records are backed up regularly, and we check from time to time that we can restore them and produce printed copies.
4. Records are protected under our Information Security and Data Breach Response Policy and kept confidential under our Confidentiality Policy. The Law Society's auditors get access as the law requires, as our Law Society Regulatory Compliance Policy explains.

Corporate records

As an Ontario corporation, NEO keeps the following records, at its registered office or another place in Ontario its directors choose (a register of land must be kept at the registered office):

• its articles and by-laws, any amendments, and a copy of any unanimous shareholder agreement;
• minutes and resolutions of its shareholders and directors;
• its register of directors, securities register, register of individuals with significant control and register of any land it owns in Ontario;
• adequate accounting records, kept for at least six years from the end of the last fiscal period they relate to, or longer if tax rules require.

These records are protected against falsification and can be produced in a clear, accurate form within a reasonable time to anyone entitled to see them.

NEO files its annual return under the Corporations Information Act through the Ontario Business Registry within six months after its fiscal year-end, and tells the Law Society about any change to its articles.

Tax and payroll records

• Tax records (income tax and HST) and their supporting documents are kept for at least six years from the end of the last tax year they relate to, or longer where the Canada Revenue Agency's rules require, for example after a late-filed return, while an objection or appeal is open, or for long-term records such as the share register. They are kept at our place of business in Canada, unless the CRA gives written permission to keep them elsewhere, and electronic records are kept in a form the CRA can read.
• Payroll and employment records are kept as our Payroll and Pay Days Policy explains.

Review

This policy is reviewed at least once a year, and whenever By-Law 9, the Business Corporations Act or the CRA's rules change. The principal approves every change.

Questions

Questions about this policy go to the principal. Email info@neolegalservices.com, call 647-200-3526 or toll-free 888-519-2435, or write to us at Unit 236, 1099 Kingston Road, Pickering, Ontario L1V 1B5.