Accounting Audit.

As stated previously a fiduciary must file accountings with the commissioner in accordance with a required timeline and the commissioner and the commissioner's audit the accounting in detail. Black’s Law Dictionary defines the word “audit” as a formal examination of an individual’s accounting records. Supporting records for accounting entries is an essential part of the audit process. 

Accounting Instructions.

The written instructions provided with the accounting for a descendant’s estate contains excellent information on the type of supporting documents required to be provided with the accounting.

Types of Supporting Documents.

With limited exceptions, the fiduciary must provide originals of the supporting documents with their accountings. Original statements for bank accounts, investment accounts, retirement accounts, annuities and other account, financial or brokerage accounts and receipts, disbursements and distributions should be provided.

First Accounting Documents.

The first fiduciary accounting starts with beginning assets that are stated in the fiduciary's Inventory fof assets filed by the fiduciary with the commissioner. Therefore, with the first accounting the fiduciary must include with their supporting documents for each account identified on the Inventory from and including the month in which the decedent died through the date when the account is liquidated and closed and the balance of each such account is deposited to an estate account. Such statements will allow the commissioner to verify that the beginning numbers are correct and ensure that all additional interest, dividends, or other income, or in the alternative adjustments, to the originally stated assets can be determined and confirmed in the account.

Disbursements.

Disbursements and payments shown on a fiduciary’s account typically require original supporting records in two parts. The first part is an invoice, statement or other record that describes the item or service or purpose of the payment, and amount of payment for example, an invoice describing and billing for the funeral costs. The second part is proof of payment of the amount shown to be due on the invoice. Proof of payment can be provided by way of the original invoice itself being marked “paid in file” and signed by the payee, a signed paid receipt for cash which indicates it is in payment of the invoice, or other proper confirming documentation acceptable to the commissioner. A cancelled check as described in the next paragraph can serve as evidence of payment of the services described in the invoice or bill.

Requirements for Copies.

TIP:  Most banks no longer provide original cancelled checks with the monthly bank statements. Therefore, before opening an estate account, confirm what procedure is available for you to obtain copies of the front and back of a cancelled check. Some banks offer copies of the cancelled checks with their online banking service. Such copies (front and bank) should as described above be acceptable if the fiduciary also provides the original bank statements for the account to the commissioner. 

NOTE: When opening an estate bank account, confirm with the bank that it will send original paper account statements by mail to you for each statement period. Do not opt to go "paperless," which is typically encouraged by banks. You will need to submit the original account statements to the commissioner with the fiduciary accountings. 

TIP : Obtain a good sized file folder sufficient to hold a year’s worth of documents. As you received or gather invoices, bills, bank statements, and other documents that will be necessary to support the entries on the fiduciary accountings, place those documents in chronological order in the folder, including print copies of cancelled checks (both sides). When it comes time to prepare the fiduciary accounting, your will already have most of the supporting documents in proper form and order and save a substantial amount of time.