Accounting Principles (1)

Question 1

What are the two basic types of Client bank accounts

Answer 1

General Client accounts (multiple clients) and discrete or designated Client accounts
AMS or Client Money System account with virtual bank accounts

Question 2

What should bank accounts include

Answer 2

instant access unless 60 or 90 day notice accounts which require written permissions and terms of business reflect appropriate conditions
It is important interest is paid to Clients unless permission is obtained for Firm to retain interest
and bank charges should be paid by Client

Question 3

How should Client bank accounts be named

Answer 3

Client bank accounts should include the word Client and the company name or Clients name

Question 4

What do you need to do to open a Client account

Answer 4

In order to open a Client account a condition of operations letter must be granted by the bank.
Obtain a bank mandate.

Question 5

What does the banks letter of operations contain in relation opening a Client account

Answer 5

Statement reading All money standing to the credit of the account is clients’ money and The Bank or Building Society is not entitled to combine the account with any other account.
Any interest payable in respect of monies held in the account shall be credited to that account.

Question 6

What are the two main components of Client accounting?

Answer 6

Cash books and Client ledgers -
Cash book records all income and expenditure with a running balance.
Client ledgers are mini cash books identifying the Clients’ balance at any given time.
It is very important that all accounting records should be written up from source documentation in chronological order and on a timely basis

Question 7

How long are firms required to keep Client account records

Answer 7

a minimum of 6 years

Question 8

What should Client accounts never be

Answer 8

Overdrawn

Question 9

What offence does the proceeds of crime act cover?

Answer 9

concealing, disguising, converting, transferring or removing criminal property from the UK.
Entering into or becoming involved in an arrangement which facilitates the acquisition, retention, use or control of criminal property by or on behalf of another person.
the acquisition, use and/or possession of criminal property.

Question 10

What is the objective and requirements of the Money Laundering Act 2007

Answer 10

The Money Laundering Regulations 2007 require firms to put policies and procedures in place in order to prevent money laundering and terrorist financing