CTAPP Compliance Review FAQ
How are attorneys selected?
Initially, attorneys selected for compliance review will represent a cross-section of the legal community. In the future, the State Bar may select attorneys using a risk-based and random selection criteria. Factors may include prior trust account activity, self-reported information through CTAPP registration, or other factors driven by State Bar data and oversight priorities. Being selected for a compliance review is not, by itself, an indication of misconduct.
How much will a compliance review cost?
When the State Bar selects an attorney for a compliance review, the review is conducted on the firm’s trust accounting practices. The cost of a compliance review will generally range between $5,000 and $10,000. However, poor recordkeeping, slow response times in turning over requested documents, and unclear communications will generally require the CPA to spend more time completing the compliance review, potentially increasing the cost. On the other hand, records that are well-maintained and comply with the rules outlined in the scope of the compliance review procedures published for public comment will likely result in lower costs to attorneys.
If I’m denied the exemption to hiring a CPA firm, can I appeal or request reconsideration?
If your application for exemption is denied, you may submit a written request for reconsideration with additional supporting documentation. The State Bar will re-evaluate your eligibility based on the new information provided.
Will the CPA firm contact me directly, or will all communication go through the State Bar?
After you select a CPA firm and the State Bar has assigned the compliance review engagement to the CPA firm, you will be contacted directly by the CPA firm, who may request additional records, ask clarifying questions, and coordinate with you for the remainder of the compliance review process. The State Bar will remain available to assist if needed.
What records am I required to maintain for my trust account?
The standards of rule 1.15 of the California Rules of Professional Conduct require attorneys to maintain the following trust account records for each client matter:
- Account journal for each trust account, organized in chronological order with the daily running balance for the overall trust account
- Client ledgers showing all receipts and disbursements for individual clients, organized in chronological order with the daily running balance
- Bank statements with copies of checks
- Monthly three-way reconciliations balancing the account journal, client ledgers, and bank statements, including support documentation required to complete monthly reconciliations, such as monthly client ledger summaries, lists of outstanding deposits, and lists of outstanding disbursements
In addition, records supporting Rules of Professional Conduct, rule 1.15 and other related statutes governing trust account recordkeeping practices include:
- Records of notices to clients or other persons of the receipt of funds within 14 days
- Records supporting all deposits and disbursements to establish compliance
- Engagement letters, fee agreements, settlement agreements, invoices or billings, and client communications regarding fees, accounting, and disputes
We recommend completing the Firm Self-Assessment with Practice Aid (coming September 2025) for a complete list of records and recordkeeping practices to evaluate compliance with the Rules of Professional Conduct and applicable law regarding the safekeeping of funds entrusted by clients or others and any related obligations.
How far back do I need to provide records?
The scope of a compliance review will encompass at least one year of trust account activity, which will generally be January 1 to December 31 of the prior year. If a compliance review identifies findings that require a licensee to participate in an investigative audit performed by the State Bar, the scope of the audit will encompass at least three (3) years of trust account activity but will not go beyond five (5) years; see Rules of the State Bar, rule 2.6(B) and Rules of Professional Conduct, rule 1.15(d)(5).
What happens if I can’t find some of the records?
If certain records are unavailable, you must notify the CPA or State Bar reviewer as soon as possible. You may be asked to explain the reason for the missing documents and provide any alternative documentation or context available.
What is the difference between a client ledger and the account journal?
A client ledger is a record of all trust account transactions for a specific client or matter. The account journal is a running record of all transactions affecting the entire trust account. The client ledger tracks individual client balances, while the journal shows the total activity in the account.
How do I securely send my trust account records?
All documents must be uploaded through the State Bar’s secure online portal. This system ensures encrypted, confidential transmission and complies with data privacy and privilege protections.
What happens to my files and records after the review is over?
All records submitted for the compliance review are retained securely by the State Bar and/or CPA firm within the State Bar Audit Platform for the duration required to complete the review and fulfill regulatory obligations. The CPA firms agree that the State Bar will retain all files. Confidentiality and privilege protections remain in place. After the review is concluded, records are handled in accordance with the State Bar’s retention policies and applicable confidentiality rules.
How much time will I have to respond to the State Bar/CPA reviewer’s questions or requests for documents?
You will be given a due date by which you must respond to each request from the State Bar/CPA reviewer. It is important to communicate proactively if you need more time, as deadlines are designed to keep the review on track.
How do I contact the reviewer if I have questions during the review?
You may contact the assigned State Bar accountant or CPA firm’s accountant directly via the contact information they provide when the review begins. You may also reach out to the State Bar’s CTAPP team for questions. The contact information for the State Bar team was included in the initial notice of selection for audit.
What happens if I miss a response deadline, provide poor records, delay providing documents, or do not cooperate?
Poor recordkeeping, delayed responses, or lack of cooperation may prolong the compliance review and may be considered noncompliance with CTAPP requirements. Consequences can include:
- Additional time and cost, as the CPA may need to spend more hours completing the review due to incomplete or unclear documentation
- Serious or unresolved findings that may result in escalation to an investigative audit by the State Bar or possible referral to the Office of Chief Trial Counsel for potential disciplinary action
Timely communication and good faith cooperation are essential. If you anticipate any delays, you are encouraged to notify the CPA or the State Bar as early as possible. Reasonable extensions may be granted when appropriate.
What happens if problems or discrepancies are identified during the compliance review?
If the CPA identifies issues or discrepancies in your trust accounting practices, the State Bar will evaluate the findings, discuss with the designated licensee, and determine the appropriate next steps. Depending on the nature and severity of the issues, next steps may include education, a corrective action plan, further investigation, or a referral to the Office of Chief Trial Counsel.
What are the possible outcomes?
Possible outcomes of the compliance review include:
- Confirmation of compliance with no further action
- Recommendations for best practices for a compliance review with minimal findings
- A mandatory corrective action plan
- Escalation to an investigative audit
- Referral to the Office of Chief Trial Counsel for possible disciplinary action
Will the compliance review outcome affect my license or standing with the State Bar?
The compliance review itself is not a disciplinary proceeding. However, serious or unresolved findings may result in a referral to the Office of Chief Trial Counsel. Attorneys who demonstrate good faith effort to comply and correct issues are generally supported with guidance and corrective measures, not discipline.
What are the most common compliance mistakes?
Some of the most frequent compliance issues include:
- Not performing monthly three-way reconciliations of the trust accounts
- Errors in distribution calculations to both the law firms and clients
- Designated licensee failing to supervise trust account recordkeeping performed by staff, bookkeepers, or outside vendors
- Commingling personal and client funds, often through overpayment or underpayment of withdrawals from the trust account
- Delayed or missing written notice to clients when funds are received on their behalf
- Lack of documentation for deposits and disbursements, or incorrect amounts recorded
- Failure to promptly distribute undisputed funds to the client or third party within 45 days
- Missing or incomplete account journals that do not contain all required fields:
- Date of each transaction
- Client related to each transaction
- Amount of each deposit and disbursement
- Running balance
- Failure to maintain client ledgers that contain all required fields:
- Date of each transaction
- Source of funds (payor) or payee of each transaction
- Amount of each deposit and disbursement
- Purpose of each transaction
- Running balance