This interview is with Kharla Denura, Legal Trust Accounting Specialist, Kharla Denura.
To start, for readers of connectively.us, how do you describe your role as a Legal Trust Accounting Specialist?
I provide remote bookkeeping support to U.S. law firms, specifically around trust accounts. The core of the work is making sure the bank balance, the book balance in QuickBooks Online, and the client ledger in the firm’s case management software all reconcile. When they do not, I locate where the discrepancy began and correct it.
Most of my engagements involve cleanup or catch-up work; firms come to me with months or years of unreconciled records. The books did not fall apart all at once. Trust accounting problems are usually cumulative—small entries that were miscategorized or missed—and they compound quietly until the gap becomes hard to ignore. My job is to reconstruct what happened, correct the history, and get the accounts to a state the firm and their CPA can rely on.
Legal trust accounting has been my focus from the beginning. My first bookkeeping client was a law firm, so I never went through a period of general bookkeeping before moving into this. That matters because trust accounts carry compliance obligations that general bookkeeping does not, and the rules around client funds are specific enough that experience in this area is not interchangeable with general accounting experience.
What path led you into legal trust accounting?
I started freelancing in late 2022 while finishing my final year in Management Accounting. My first bookkeeping client was a law firm. That was not deliberate at the time; it was simply the first client I got, but it set the direction for everything that followed.
Because I started there, I never had a period working as a general bookkeeper first. The first books I worked on had trust accounts, IOLTA requirements, and three-way reconciliation. That became my norm, and I built my skills from that starting point rather than coming into it later from a different background.
A second law firm client found me on a freelancing platform without my applying. His subscription had expired, so he googled my name, found my profile in search, and reached out directly. He told me that posting a job would have pulled hundreds of applications, but he found me instead. That moment made clear that my profile was already attracting the right clients, and that legal trust accounting was where I had the strongest positioning.
From there, I became more intentional. I cleaned up my profiles and consolidated everything under one identity. The clients I have now are all law firms, and the work is all trust accounting.
When you onboard a firm with fragmented trust records, what is the first practice you implement to stabilize the books?
Most firms that come to me with messy trust accounts do not have a clear picture of their books. They know something is wrong but not specifically where or how far back it goes. So the first practice is not a correction; it is an assessment.
- the period involved
- how many accounts are affected
- whether client trust balances are separated per client or lumped together
- whether there are any negative balances in the ledger
Once I have that picture, I work chronologically. I start from the earliest unreconciled period and move forward, matching transactions against bank statements and client ledger entries one period at a time. Jumping around or trying to fix the most recent period first without clearing the history underneath it creates more problems than it solves.
The discovery call guide I use before any engagement starts is built around getting as much of that information upfront as possible, so the actual cleanup work can move in one direction from day one rather than stopping to reassess midway through.
How do you structure an earned‑fee and transfer tracker to prevent premature revenue recognition?
It depends on the firm’s existing workflow. I do not come in with a fixed system and apply it across every engagement. I look at what the firm already has, match my approach to that, and suggest improvements where I see gaps, but any change has to be understood and approved by the attorney first. They need to know why a change is being made and whether it actually fits how they work.
For one client we use a shared Google spreadsheet that tracks deposits, lump-sum transfers, and audit correction entries in real time. It gives both of us visibility into what has moved, what is pending, and what has been documented. That transparency is useful for cleanup work because every correction entry needs a clear record of why it was made.
For other clients I maintain my own internal tracker built around what has actually cleared the bank rather than what the system shows. That distinction matters because a transfer can be recorded in the case management software or in QuickBooks before it has cleared the bank, and if that entry is treated as earned income before the bank confirms it, the timing is off.
Premature in this context means fees were moved from the trust account to the operating account before they were actually earned—before the work was completed, before the client authorized the transfer, or before the bank cleared it. When that happens, the trust account balance no longer reflects what the firm actually holds on behalf of the client, which is a compliance problem regardless of whether the intent was correct.
When those situations are identified during cleanup, I propose corrective entries before anything is finalized. The attorney reviews and approves each correction so they understand what happened, why it needs to be fixed, and what it means for the trust account going forward. Nothing gets adjusted without that sign-off.
What is your step‑by‑step routine for establishing a durable three‑way reconciliation?
The first thing I establish before anything else is a clear picture of where the funds actually stand. That groundwork happens outside of QuickBooks, and it is what the entire reconciliation is built on.
- Begin at the earliest unreconciled period and work forward month by month. Jumping to the most recent period without clearing the history underneath it creates more problems than it solves, so the order matters.
- Document every identified issue with enough detail for the attorney to understand what happened and why a correction is needed.
- Apply corrective entries, including transfer corrections, only after the firm has reviewed the issues and we have agreed on how to proceed.
- Coordinate with the firm when corrections require action on their end before I can record anything.
The reconciliation is durable when the bank, the accounting software, and the case management software all agree, every transaction is supported, and any remaining difference has a clear explanation behind it.
Looking across jurisdictions, which bar‑rule nuance has most changed how you write SOPs for trust compliance?
The reconciliation concept is generally the same across the firms I work with. What changes is how client trust liability accounts are named and structured in QuickBooks. Some firms need matter-level detail included, not just the client name. Others already track that in their case management software, so the QuickBooks setup follows from what is already there.
Either way, the goal is the same: the bank, QuickBooks, and the case management software all need to agree at the client level. How I structure the accounts in QuickBooks adjusts based on the firm’s existing workflow.
If there are specific rules in their state that affect how something should be handled, I ask the attorney. That clarity helps ensure the books reflect what the firm actually needs.
From an asset‑protection lens, what segregation‑of‑duties workflow do you recommend before any trust disbursement?
Internal controls design is the responsibility of the attorney and firm management, not mine. What I can speak to is what I flag on the accounting side before disbursements are processed, because recording errors left uncorrected directly affect what the firm believes it holds for each client.
The issues I catch earliest are duplicate entries, missing retainers, and miscalculated transactions. A duplicate entry can make it appear a client has more funds than they actually do. That can lead to refunds being issued for unused funds when the client actually owes the firm, or to earned fees being applied against retainers that do not really exist.
A miscalculated transaction can push a client balance into the negative without anyone realizing it until reconciliation catches it. I flag these issues as early as possible in the process because the further into a disbursement cycle they go, the harder they are to correct without affecting other clients or accounts. The goal is to make sure the balance the firm sees for each client reflects what is actually there before any funds move.
That is the boundary I work within. The decision to disburse is the attorney’s. My job is to make sure the records they are working from are accurate before that decision is made.
On documentation and audit readiness, what evidence trail do you maintain so an auditor can trace a matter from deposit to disbursement quickly?
Everything that happens during the reconciliation is documented in a shared spreadsheet. Every identified issue is logged with a description, the amount, the affected client or account, the correction applied, and notes explaining why the correction was needed. That record exists separately from QuickBooks, so there is a clear external reference for every change made inside the system.
On the QuickBooks side, reconciliation and custom reports are kept for every account and every period covered. Client trust liability transactions are tied per client so the balance for each client is traceable through a custom report or liability sub-account method without having to dig through a combined ledger. Transactions are tied to the specific client they belong to from the point they are recorded.
The goal is that an auditor can follow a client’s funds from the initial deposit through every transaction to the final disbursement without needing to ask the firm for additional context. The trail is maintained in:
- The shared spreadsheet
- The QuickBooks reconciliation/custom reports
- The case management software
All three point to the same picture.
Thinking of your toughest multi‑year trust cleanup, what were the first three actions you took to reconstruct history without disrupting active matters?
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The first thing I do before touching anything is build a clear picture of the records outside of QuickBooks. I map out what the transactions look like at the client level across the full period, so I know what I am working with before making any entries. That groundwork is what the entire reconstruction is built on.
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From there I work chronologically from the earliest unreconciled period forward, one month at a time. Multi-year reconstructions require that sequence. If you start in the middle or try to fix the most recent period first, the history underneath it does not support what you are building.
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As issues are identified, everything gets documented in a shared spreadsheet and presented to the firm before any corrections are applied. In some cases the issues uncovered during cleanup, such as duplicate records, miscalculated transactions, and incorrect balances, represent real financial impact that had already occurred before I started. Once verified, the firm absorbs those losses. That conversation happens transparently, with the documentation to support it, so the attorney understands exactly what happened and why.
The historical reconstruction does not create new problems for active matters. It surfaces what was already there, and the documentation ensures the firm understands what that means before anything is finalized.
Thanks for sharing your knowledge and expertise. Is there anything else you'd like to add?
Three-way reconciliation sounds technical, but what it really means is that every dollar a law firm holds for a client can be accounted for. When that breaks down, the firm is exposed. When it holds, everyone is protected. That is what I show up to work on every day.