Segregation of duties in escrow reconciliation

Short answer: ALTA Best Practices v5.0 Pillar 2 says escrow reconciliations are conducted by someone who does not have signing or disbursing authority. A small agency can meet it with a segregated staff member or by engaging an outside contractor, which Pillar 2 expressly allows.

ALTA Best Practices v5.0, Pillar 2: "Segregation of duties is in place to help ensure the reliability of the reconciliation and reconciliations are conducted by someone who does not have signing or disbursing authority."

Why it matters

The person who can move the money should not be the only person who checks where it went. Separating the two is what makes the reconciliation worth relying on.

The small-agency problem

In a small office the same few people open files, receive funds, cut checks and keep the books. Finding someone inside with no signing or disbursing authority, and the time to reconcile every day, is hard.

The options

• Inside, segregated: a staff member with no signing or disbursing authority does the reconciliation.
• Outside: Pillar 2 says "Settlement companies may engage outside contractors to conduct Escrow Trust Accounting duties."
• Either way, management reviews the monthly results and they are made available to the title insurer.

How AER fits

AER reconciles your escrow accounts every business day, from outside the people who move the money, and delivers the monthly compliance portal. AER does not move money, does not approve disbursements, and does not touch your ledger.

Escrow reconciliation services · Free Snapshot

This page is general information, not legal advice.