Three-Way Trust Reconciliation

Centerbase auto-populates a Three-Way Trust Reconciliation Report at the bottom of every trust account reconciliation. This consists of the Bank Balance, Book Balance, and Client Ledger Balance. Explanations of these line items are below.

Header

The header of the report lists the name of the law firm, the name of the bank account and the ending date of the report, the date reconciled, and by whom the account was reconciled.

Bank Balance

The Bank Balance is the first piece of a Three-Way Reconciliation. The beginning bank balance equals the beginning bank balance on your trust bank statement. This is also typically the Ending Bank Balance of your prior reconciliation.

The Bank Balance section then shows all the cleared deposits and checks/payments, followed by the Ending Balance listed on the Statement. 

The calculation is Beginning Bank Balance plus any cleared deposits, minus any cleared checks or other payments equals the Ending Bank Balance. It is unlikely that your bank balance will match the Book Balance or Client Ledger Balance, particularly if you have a high volume of transactions flowing through your trust account.

Book Balance

The Book Balance is the Ending Bank Balance, which has already taken into account all cleared transactions. The Book Balance now looks at all uncleared transactions within the reconciliation timeframe. 

The calculation is Ending Statement Balance plus uncleared deposits and credits, minus uncleared checks and other payments. While this does not often match the Bank Balance it must match the Client Ledger Balance.

Client Ledger Balance

This consists of the total balance of your trust account based on the Trust Balance by Client and Matter Report as of the ending date of the reconciliation. 

This number should always match the Adjusted Book Balance because it is the actual amount you have available in the trust account, taking into account both cleared and uncleared transactions. 

If the Adjusted Book Balance and Client Ledger Balance do not match, you will need to investigate the reason. It is possible that a payment was entered into a client’s ledger but accidentally deposited to a different trust account or checks have been voided outside the period they were written.* 

*Note that we will be changing the way checks are voided in Centerbase to resolve this and other issues.