Escrow Audit Readiness: A Checklist for Title Agencies

Escrow audits are unavoidable and often become stressful when reconciliation and documentation fall behind. Audit requirements vary by state, regulator, and underwriter, but auditors commonly request the last two to three months of monthly reconciliation reports and expect a complete set of core documents. Core documents typically include bank statements, reconciliation summaries, trial balances, statement proofing registers, bank adjustments and book balances, and reports of outstanding receipts and disbursements. Auditors also verify that escrow trust accounts are properly labeled on bank statements, checks, and deposit tickets. Auditors look for true money errors such as negative file balances and for aged or unresolved items like deposits in transit, outstanding wires, stale payoff or tax checks, aged outstanding checks, and unidentified ledger balances. Regular review supports smooth audits.

"An audit begins with an auditor's request for documentation, typically the last two to three months of monthly reconciliation reports. At a minimum, you should be prepared to provide a complete set of core documents. This usually includes the bank statements for the reconciliation period, your reconciliation summary, trial balance, statement proofing register, bank adjustments and book balance, along with the report of outstanding receipts and disbursements."

"Auditors will also confirm that escrow trust accounts are properly labeled on bank statements, checks and deposit tickets, as required by ALTA Best Practices. Beyond documentation, auditors focus on issues that signal potential problems in escrow accounting. This includes true money errors, such as negative file balances, as well as aged or unresolved items, such as deposits in transit, outstanding wires, stale payoff or tax checks, aged outstanding checks and unidentified ledger balances."

"Because ALTA Best Practices require a complete threeway reconciliation each month and underwriters rely on it as the primary measure of escrow account accuracy, it remains the central foundation of audit readiness for every title agency. A three-way reconciliation confirms that three key figures are in alignment: the bank balance, th"

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