52
listingoflawyerslistedasmembersofthetwochosenjudicialdistrictbarsinourdatabase.Thenumberoflawyers
auditedineachdistrictisdeterminedbyproration.Forexample:ThetwodistrictsselectedareDistrict1andDistrict
18.District1has200lawyersandDistrict18has1,300.
Therefore,District18ha s87%ofthe1,500totallawyersto
bedrawnfrom.District18wouldthereforereceive87%ofthe60allocatedrandomaudits,or52outof60.Dis trict
1,withonly13%ofthetotallawyerstobedrawnfrom,wouldreceiveeightrandomaudits.Startingat
thetopof
thecomputer‐generatedlistofrandomnamesoflawyersdrawnfromeachjudicialdistrictbar,thestaffauditor
schedulesappointmentsforauditsuntiltherespectivenumberoflawyersfromeachjudicialdistrictlistisreached.
Thelawyerselectedforrandomauditdoesnothavetobea
signatoryonthetrustaccountorapartneror
shareholderinthelawfirm:allgeneral,dedicated,andfiduciaryaccountsforalawfirmarereviewedwhenany
lawyerpracticingwiththefirmisselectedforrandomaudit.Lawyerswhodonotmaintaintrustaccounts(e.g.,
judges,prosecutors,publicdefenders,corporate
lawyers,etc.)areeliminatedfromthelist.
D.ScopeofAudit
Randomauditsareusuallyproceduralauditsoflimitedscope.However,auditsconductedpursuanttotheState
Bar'srandomauditprogrammayincludeasu bstantiveinquiryintoalawyer’shandlingofclientfunds,andtheState
Barauditorhastheauthoritytotakeappropriatestepstoensurethattheauditedlawyer
correctsprocedural
problemsdiscoveredduringarandomaudit.
Membersselectedforrandomauditarerequiredtoproduceallrecordsnecessarytodemonstratecompliancewith
therecordkeepingrequirementsoftheRulesofProfessionalConductconcerningactivityduringtheprecedingyear.
Auditsarescheduledinadvancebyagreementwheneverpossible.There
arenosurpriseinspections.
Whenalawyerassociatedwithorbelongingtoalawfirmisselectedforrandomaudit,theauditorinspectsthe
recordsforanytrustaccountmaintainedbythelawyerorbythelawfirm.Ifsomeofthetrustaccountsmaintained
bythefirmweresubject
torandomauditwithintheprecedingthreeyears,theauditislimitedtorecordsforany
trustaccountwhichwasnotauditedduringthethree‐yearperiod.
Duringanaudit,therecordsforthepast12monthsofactivityareexamined.Th eauditincludestheexaminationof
canceledchecks,deposit
slips,bankstatements,ledgercards,andthebookkeeping/softwaresystem(i.e.,check
stubs,receipts,disbursementjournals,softwareregisters,etc.).
Duringanaudit,thelawyerdoesnothavetobeattheauditor'sbeckandcall.Usually,anappropriatememberof
thelawyer'sstaffcananswertheauditor'squestions.Attheconclusion
ofthereview,theauditormeetswiththe
lawyertocritiquetheproceduresthefirmisusingtomaintainitstrustaccount(s).Thelawyeriswelcometoinvite
theotherlawyersinthefirmormembersofthestafftobepresentduringthecritique.Acopyoftheauditor's
memo
outlininganyproceduraldeficiencyisprovidedtothelawyer.Insomesituations,thelawyermustprovide
writtenassurancetotheStateBarthatcertaindeficiencieswillbecorrected.Forexample,alawyerwhohasfailed
toreconcileatrustaccountonaquarterlybasis(seeRule1.15‐3(d))maybe
askedtostate,inwriting,thatmonthly
orquarterlyreconciliationswillbeimmediatelyundertaken.Thetrustaccountsarethenmonitoredtoensurethat
thelawyercomplies.Insomeinstanceswhendisciplinemaybeappropriate,agrievancefilemaybeopened.Ifthe
grievanceisnotbasedondishonesty,fraud,or
deceit,thelawyermaybeofferedentryintotheTrustAccount
Compliance(TAC)program,describedindetailbelow.
E.TrustAccountComplianceProgram(TAC)
TheStateBarhascreatedanewprogrampursuanttoDisciplineandDisabilityRulesoftheNorthCarolinaStateBar,
27N.C.A.C.Chapter1,SubchapterB,Section.0112(l),whichwasapprovedbytheNorthCarolinaSupremeCourtin
March2011.
TheTrustAccountComplianceProgram(TAC)isavoluntaryprogram.
Participationisconfidential.Whenalawyeris
foundafteraproceduralaudittohavesignificanttrustaccountcomplianceissues,agrievancefilemaybeopened
bytheStateBar.TheGrievanceCommitteemayelecttostaythegriev an ceandofferthelawyerentranceintothe
program.Ifthelawyerconsents
toparticipateintheprogram,heorshewillberequiredtocommunicatewiththe
StateBar’strustaccountcompliancecounsel,whowillmonitorthelawyer’strustaccount,reviewthelawyer’strust
accountingrecords,andinspectthelawyer’shandlingofentrustedfundsforaslongastwoyears.Participationin
the
programisgenerallyconfidential,butthetrustaccountcompliancecounselwillcommunicatewiththe
GrievanceCommitteeaboutthelawyer’sparticipation.Ifthelawyertimelycomplieswithallrequ irementsofthe