NEWPORT BEACH, CA, UNITED STATES, January 9, 2026 /EINPresswire.com/ — A new proprietary study by Chief Bookkeeping Officer (CBO) highlights a growing risk area for small law firms, audit readiness for client trust accounts. In an opt in survey fielded December 22, 2025 through January 1, 2026, CBO collected 164 responses from self-identified U.S. based legal professionals reached via LinkedIn outreach, legal focused Facebook groups, and email lists. Only 41% reported feeling “calm” about their ability to demonstrate trust account accuracy in the event of a state bar audit. Results are unweighted and percentages may not total 100% due to rounding.
What is IOLTA and why does it matter? IOLTA (Interest on Lawyers’ Trust Accounts) refers to specialized bank accounts where attorneys hold funds that belong to clients, such as settlement proceeds, retainers not yet earned, and other client advances. Because these funds are not the attorney’s money, state bars impose strict fiduciary handling requirements and, in many jurisdictions, may audit to confirm that funds are properly safeguarded and accurately tracked.
Audit readiness typically depends on a three-way reconciliation process that confirms the bank balance, the total of all client ledgers, and the trust liability balance match. When trust accounting breaks down, it can expose a firm to disciplinary risk and client disputes.
The “Confidence Gap” Exposed
The survey results suggest a substantial disconnect between attorneys and the staff members performing the day-to-day bookkeeping work.
• The disconnect: 70% of attorneys reported feeling audit ready, compared with only 26% of staff. (Attorneys n=56, Staff n=108)
• The “terror” factor: Nearly 75% of staff selected either “panic” or “sheer terror” at the prospect of an audit. (Staff n=108)
• The spreadsheet trap: Among respondents who answered the workflow question (n=157), 100% reported relying on manual spreadsheets to some degree, an approach that often lacks audit trails and consistent controls.
“The survey suggests IOLTA compliance is a black box in many firms,” said Marc Pamatian, Founder of Chief Bookkeeping Officer. “Attorneys remain accountable for trust integrity, but they may not see the manual, fragmented processes staff use to keep things moving. This is not just a law firm bookkeeping issue. It is an operational and licensing risk.”
The findings underscore the need for standardized trust bookkeeping protocols, stronger month end controls, and clearer training and oversight so firms can confidently substantiate trust balances when requested.
To review the survey findings and benchmarks, visit https://www.chiefbookkeepingofficer.com/iolta-readiness-survey-2026
About Chief Bookkeeping Officer
Chief Bookkeeping Officer (CBO) provides outsourced bookkeeping and trust accounting support for law firms, including monthly financial close workflows designed to improve audit readiness with 3-Way IOLTA Reconciliations, reporting clarity, and operational control.
Media Contact:
Marc Pamatian, Founder
Chief Bookkeeping Officer, LLC
301 Bayview Cir, Ste 104-2263, Newport Beach, CA 92660
ChiefBookkeepingOfficer.com
Marc Pamatian
Chief Bookkeeping Officer
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