CTAPP compliance reviews: what California attorneys need ready
Updated · Rotomal
The State Bar of California began CTAPP compliance reviews on 29 September 2025, when it started notifying 100 selected attorneys, and up to 800 a year are expected (Daily Journal, 25 June 2026). A CPA reviews at least one year of trust account activity, generally January to December of the prior year, and asks for each account's journal, client ledgers, bank statements with check copies and monthly three-way reconciliations. The State Bar estimates the cost at $5,000 to $10,000; attorneys with gross receipts of $150,000 or less can apply to be reviewed by State Bar CPA staff instead. In the voluntary pilot, 83% of the 18 firms had noncompliant monthly three-way reconciliations.
Selection, period and cost
| Item | Detail |
|---|---|
| Program in force | CTAPP took effect on 1 January 2023: annual reporting, trust account registration and self-assessment |
| First compliance reviews | 29 September 2025: the State Bar began notifying 100 attorneys, for reporting year 2024 |
| Expected volume | Up to 800 attorneys a year |
| How attorneys are chosen | Initially a cross-section of the legal community; later selection may be risk-based or random. Being selected is not, by itself, a sign of misconduct |
| Period reviewed | At least one year, generally 1 January to 31 December of the prior year. An investigative audit covers at least three years and no more than five |
| Who reviews | A CPA. Unless exempt, you choose a CPA firm from the State Bar's approved list |
| Cost | The State Bar estimates $5,000 to $10,000; the Daily Journal reported an average of about $7,700 |
| Lower-income route | Gross receipts of $150,000 or less (generally shown on Schedule C): apply for review by State Bar CPA staff instead of hiring a firm |
The Daily Journal lists three cost drivers: the number of trust accounts and transactions, the type of practice, and how well prepared and organised the firm is.
What the reviewer checks
- Records exist for each trust account: account journal, client ledgers, bank statements with check copies and monthly three-way reconciliations.
- Each journal entry shows the date, client name, amounts and a running balance; each client ledger entry shows the date, payor or payee, amount, purpose and running balance.
- Client ledgers and the bank charges ledger reconcile to the account journal, and the adjusted bank balance reconciles to the journal, for sample months.
- Trust account and client ledger balances were always positive, or each overdraft is documented with the corrective action taken.
- No attorney or firm money sat in trust beyond what covers bank charges or a disputed fee.
- Fees were withdrawn within 45 days of becoming fixed and earned, and undisputed funds were distributed within 45 days, unless there was good cause.
- The designated licensee is a signatory on the account and regularly reviews bookkeeping done by others.
This list follows the State Bar's proposed review scope, published for public comment in 2025, and its compliance review FAQ.
What the pilot found
Before the mandatory phase, the State Bar ran a voluntary pilot. Among the 18 firms that completed it, as reported in the Daily Journal:
- 83% had noncompliant trust account journals.
- 89% had noncompliant client ledgers.
- 83% had noncompliant monthly three-way reconciliations.
- The State Bar also reported late client notification, delayed distribution of funds, inadequate attorney supervision and incorrectly calculated fees.
The monthly reconciliation form, line by line
The State Bar's Monthly Trust Account Reconciliation and Review Certification is the clearest statement of what a California three-way reconciliation must show.
| Line on the form | What goes there |
|---|---|
| 1. Trust account journal balance | The account journal's balance at the reconciliation date |
| 2A. Total individual client ledger balances | The sum of every client ledger, including undisbursed funds |
| 2B. Bank charges balance | Firm money held to cover bank charges, from the bank charges ledger |
| 2. Total (A + B) | Must equal line 1 |
| 3A to 3C. Adjusted bank statement balance | Statement ending balance, plus outstanding deposits, minus outstanding disbursements |
| Do 1, 2 and 3 agree? | If not, the account is not reconciled: identify the errors and re-reconcile |
| Attorney certification | The attorney personally reviewed the report and supporting documents, and acknowledges a nondelegable duty |
Attach six documents: the account journal, individual ledgers, bank statement with check copies, client ledger summary with balances, and lists of outstanding deposits and outstanding disbursements. The State Bar offers the form, account journal, client ledger and bank charges ledger as free PDF and Excel downloads.
Getting twelve months ready before a notice arrives
- List every trust account and check that each is registered and has 'trust account' or similar in its name.
- For each of the last 12 months, confirm there is a completed reconciliation where lines 1, 2 and 3 agree, signed and dated by the attorney.
- Rebuild any missing month from the bank statement and ledgers now, dated when you actually prepared it.
- Clear any negative client ledger and document the correction.
- Move earned fees out of trust within 45 days of becoming fixed and earned.
- Write down who keeps the books and how the designated attorney reviews their work.
- Check that your annual self-assessment answers match what the records show; the Daily Journal notes that mismatches can raise questions during a review.
Where software helps, and where it doesn't
A compliance review tests whether a full year of records exists and agrees. Software can't create a month that was never reconciled, and it doesn't replace the CPA. What it can do is make each future month happen on time. Trust Reconciler reads your QuickBooks Online or Xero books read-only, lays out the journal, client ledger and adjusted bank totals in the order of the State Bar form, lists every difference and archives the attorney-signed pack, so the next twelve months are ready if you are selected.
Questions
Is a CTAPP compliance review a disciplinary proceeding?
No. The State Bar says the review itself is not disciplinary. Serious or unresolved findings can lead to a corrective action plan, an investigative audit or a referral to the Office of Chief Trial Counsel.
How long do I have to respond?
The State Bar or CPA reviewer gives a due date for each request. Ask early if you need more time; the FAQ says reasonable extensions may be granted.
What if some records are missing?
Tell the CPA or State Bar reviewer as soon as possible, as the State Bar's FAQ asks. Where you can, rebuild missing reconciliations from bank statements and ledgers.
Can my bookkeeper sign the monthly reconciliation?
The bookkeeper can prepare it and sign as preparer, but the State Bar's form requires the attorney to certify a personal review and acknowledges the attorney's nondelegable duty.
When is the annual CTAPP report due?
During the annual license renewal period. The State Bar's CTAPP page gave the reporting deadline as 30 March 2026 for the latest cycle; check that page for the next deadline.
Is this legal advice?
No. This guide summarises State Bar documents and press coverage; it is not legal or accounting advice. Confirm your obligations with the State Bar of California or your own counsel.
Sources
- State Bar of California: Frequently asked questions, CTAPP compliance review (selection, cost, period, records, outcomes). Source: calbar.ca.gov
- State Bar of California: Proposed scope of CTAPP compliance review procedures (public comment, 2025). Source: calbar.ca.gov
- Daily Journal, 25 June 2026 (reprint by Gursey Schneider): What lawyers need to know before a CTAPP compliance review arrives. Source: gursey.com
- State Bar of California: Monthly Trust Account Reconciliation and Review Certification. Source: calbar.ca.gov
- State Bar of California: Client trust accounting resources and training (free templates). Source: calbar.ca.gov
- State Bar of California: Client Trust Account Protection Program (reporting deadline). Source: calbar.ca.gov
- State Bar of California: Rule 1.15 and record-keeping standards. Source: calbar.ca.gov
Guides and answers
- Real estate attorney trust account reconciliation: the monthly three-way check
- Real estate broker trust account reconciliation, step by step
- Trust account reconciliation rules by state: attorneys and brokers
- Three-way trust reconciliation when your books are in QuickBooks Online
- Three-way reconciliation checklist: formula, blank form and free templates
- TREC trust account rules for Texas brokers
- Florida broker monthly escrow reconciliation (Rule 61J2-14.012)
- TrustBooks alternatives for firms on QuickBooks: an honest comparison