client accounts Flashcards
who is responsible for keeping client money safe?
all solicitors
if client money is lost or taken what should you do?
report the breach to SRA promptly (even if money has been replaced)
who does the SRA account rules apply to?
all firms (including sole practices) the SRA regulates, including all who manage or work within them
who is responsible for compliance with the SRA accounts rules?
the managers of an authorised body are jointly and severally liable
when do authorised bodies holding client money need to obtain an accountant’s report?
within 6 months of the end of each accounting period
what are the two instances when you do not need an accountant’s report?
if money is obtained through legal aid
if balance of client money you have held or received is an average of £10,000 or a max of £250,000.
what is a statement or passbook balance the total balance of?
all client accounts held or operated by you and any joint accounts and clients’ own accounts operated by you
how long must you store and retain accounting records for?
at least 6 years
when does a firm not need to get an accountants’ report?
if firm’s balance of client money doesnt exceed an average of £10,000 and max of £250,000 during an accounting period
is a joint account a client account?
no it is not a client account but it is client money
what is a joint account?
when solicitor + client or third party operate a bank account with equal access to the money
how often should you complete a reconciliation for joint bank accounts?
at least every 5 weeks a reconciliation of the bank balance for the account with cash book balance and client ledger total
what is a TPMA (third party managed account)?
accounts at banks in the named of third parties who are authorised payment institutions regulated by the FCA
is a TPMA client money?
no because it is not held or received by the authorised body
does the authorised body need permission from SRA to use a TPMA?
no dont need permission but do need to inform the SRA if they use one (or more) or stop using one
if you have already paid for costs and you receive money from the client - which account do you put this money in?
business account as client is reimbursing you for the costs you have already paid therefore, do not need to issue a bill to the client.
if you give the client a bill for your legal services and they pay you - which account does this go in?
business account as they are paying for your services therefore, belong to the business
what is a mixed payment?
a payment which includes both client money and non-client money
if client pays a mixed payment into a business account - what do you do?
you must promptly move the client money element into the client account
if client pays a mixed payment into a client account - what do you do?
you must promptly move the business money into the business account
what should withdrawals/transfers/payments in to a client account be in respect to?
they should be made in respect of the delivery of your regulated services (eg, your legal services to your client)z
