OTHER ACCOUNTING SYSTEMS AND RECORDS

OTHER ACCOUNTING SYSTEMS AND RECORDS

A broker may use trust fund records not in the columnar form as prescribed by Commissioner’s Regulations
2831 and 2831.1. Such records must be in accordance with generally accepted accounting principles and must
include detail specified in subdivision (a) of these Regulations and be in a format that will readily enable
tracing and reconciliation in accordance with Section 2831.2. Whether prepared manually or by computer, they
must include at least the following:

1. A journal to record in chronological sequence the details of all trust fund transactions.

2. A cash ledger to show the bank balance as affected by the transactions recorded in the journal. The ledger
is posted in the form of debits and credits. (In some cases the cash ledger may be combined with the
journal.)

3. A beneficiary ledger for each of the beneficiary accounts to show in chronological sequence the
transactions affecting each beneficiary’s account, as well as the balance of the account.

To comply with generally accepted accounting principles, there must be one set of journal, cash ledger, and
beneficiary ledger for each trust fund bank account.

Journal

A journal is a daily chronological record of trust fund receipts and disbursements. A single journal may be used
to record both the receipts and the disbursements, or a separate journal may be used for each. To meet minimum
record keeping requirements, a journal must:

1. Record all trust fund transactions in chronological sequence.

2. Contain sufficient information to identify the transaction such as the date, amount received or disbursed,
name of or reference to payee or payor, check number or reference to another source document of the
transaction, and identification of the beneficiary account affected by the transaction.

3. Correlate with the ledgers. For example, it should show the same figures that are posted, individually or in
total, in the cash ledger and in the beneficiary ledgers. The details in the journal must be the basis for
posting transactions on the ledgers and arriving at the account balances.

4. Show the total receipts and total disbursements regularly, at least once a month.

Cash Ledger

The cash ledger shows, usually in summary form, the periodic increases and decreases (debits and credits) in the
trust fund bank account and the resulting account balance. It can be incorporated into the journal or it can be a
separate record, for example a general ledger account. If a separate record is used, the postings must be based on
the transactions recorded in the journal. The amounts posted on the ledger must be those shown in the journal.

Beneficiary Ledger

A separate beneficiary ledger must be maintained for each beneficiary or transaction or series of transactions.
This ledger shows in chronological sequence the details of all receipts and disbursements related to the
beneficiary’s account, and the resulting account balance. It reflects the broker’s liability to a particular
beneficiary. Entries in all these ledgers must be based on entries recorded in the journal.