Accounting Terms and Concepts Flashcards
(30 cards)
What is the Fidelity Fund?
A fund liable to reimburse persons who suffer pecuniary loss, as a result of theft of money or property given in trust to a trust account practice.
Which provisions deal with a separate trust banking account?
Section 86 (1) and (2).
What do sections 86 (1) and (2) of the LPA hold?
Every attorney who must be in possession of a Fidelity Fund certificate must operate a trust account, which must be kept at a bank with which the Fidelity Fund has made an arrangement.
Which provision deals with the requirement to have a Fidelity Fund certificate?
Section 84(1).
Which provision deals with the investment of surplus trust money?
Section 86(3).
What is the investment of surplus trust money?
The investment of surplus trust money in a separate trust savings account or other interest-bearing account.
Which provision deals with the investment of trust money on behalf of a client?
Section 86(4).
What is the investment of trust money on behalf of a client?
A trust account practice, may on the instruction of any person, open a separate trust savings account or other interest-bearing account for the purpose of investing therein any money deposited in the trust account of that practice, on behalf of such person.
Which provision deals with the interest earned on trust banking account and on investment of surplus trust money?
Section 86(5)(a).
What is the interest earned on trust banking account and on investment of surplus trust money?
Interest accrued ito section 86(2) into the trust banking account as well as on money invested in terms of section 86(3) must be paid over to and vests in the Fidelity Fund.
Which provision requires the money to be deposited in a trust banking account?
Section 86(2).
What does section 86(2) hold?
Money held by the practice on behalf of any person must be deposited in a trust account as soon as possible after receipt thereof.
What does section 86(5)(b) hold?
95% of the interest accrued on money invested on behalf of a client must be paid over to the client and 5% must be paid over to and vests in the Fidelity Fund.
Which provision deals with interest earned on investment of trust money on behalf of a client?
Section 86(5)(b).
What are accounting records?
Any record or document relating to:
1. money held in trust
2. money invested ito sections 86(2), (3), or (4) and interest thereon
3. estate of a deceased person, insolvent or estate under curatorship
4. affairs of the practice.
Which provision gives the definition of accounting records?
Section 87(3).
Which provision deals with keeping proper accounting records?
Section 87(1).
Which provision deals with inspection of accounting records?
Section 87(2).
What does section 87(2) hold?
LPC and Fidelity Fund Board can inspect the accounting records of a trust account practice in order to satisfy itself that the requirements of sections 86 and 87(1) are complied with.
Who bears the costs of an inspection of accounting records?
LPC or Fidelity Fund board but they may recover the costs of writing up of the accounting records from the practice concerned if it was found upon inspection that sections 86 and 87(1) were not complied with.
What provision deals with the production of documents for inspection?
Section 87(5).
What does section 87(5) hold?
Any attorney or employee of a practice must, at the request of the Council or the Board referred to above, produce a book, document or article that is in possession, custody or under the control of the legal practitioner or employee and that relates to the practice, for inspection.
Which provision deals with the trust money of the practice?
Section 88(1).
What does section 88(1) hold?
Any amount standing to the credit of any trust account does not form part of the assets of the practice or of any attorney and may not be attached by the creditors of any such practice or attorney.
