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canceled checks, but no check register, no deposit slips, no
“pegboard register”, and no handwritten journal, for the client
trust account. The deposits into the general operating account
had been classified by the law firm’s employees as law firm
income, rental income, loan repayments, etc., and they noted
which deposits were not income to the law firm.
Mr. Reiter’s Bookkeeping and Accounting for the Law Firm
Mr. Reiter’s staff would use the schedule of deposits to
calculate the law firm’s monthly income. After Mr. Reiter’s
staff finished inputting the law firm’s monthly financial data,
the law firm’s records were stored at Mr. Reiter’s office for
later use in preparing petitioner’s tax returns.
Each month, Mr. Reiter or his staff reconciled the general
operating account. Mr. Reiter’s staff used the bank records
provided by the law firm to create a handwritten chart that
reflected the beginning balance, deposits, disbursements, any
outstanding checks, and any deposits in transit. Mr. Reiter and
his staff compiled the law firm’s business expenses on the basis
of the check stubs, and the description of the expense stated
therein, provided for the general operating account. The law
firm did not provide Mr. Reiter or his staff with receipts,
invoices, or other evidence of its expenses.
Each month, after completing the handwritten ledgers for the
general operating account and the client trust account, Mr.
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Last modified: May 25, 2011