client accounts

Question 1

who is responsible for keeping client money safe?

Answer 1

all solicitors

Question 2

if client money is lost or taken what should you do?

Answer 2

report the breach to SRA promptly (even if money has been replaced)

Question 3

who does the SRA account rules apply to?

Answer 3

all firms (including sole practices) the SRA regulates, including all who manage or work within them

Question 4

who is responsible for compliance with the SRA accounts rules?

Answer 4

the managers of an authorised body are jointly and severally liable

Question 5

when do authorised bodies holding client money need to obtain an accountant’s report?

Answer 5

within 6 months of the end of each accounting period

Question 6

what are the two instances when you do not need an accountant’s report?

Answer 6

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.

Question 7

what is a statement or passbook balance the total balance of?

Answer 7

all client accounts held or operated by you and any joint accounts and clients’ own accounts operated by you

Question 8

how long must you store and retain accounting records for?

Answer 8

at least 6 years

Question 9

when does a firm not need to get an accountants’ report?

Answer 9

if firm’s balance of client money doesnt exceed an average of £10,000 and max of £250,000 during an accounting period

Question 10

is a joint account a client account?

Answer 10

no it is not a client account but it is client money

Question 11

what is a joint account?

Answer 11

when solicitor + client or third party operate a bank account with equal access to the money

Question 12

how often should you complete a reconciliation for joint bank accounts?

Answer 12

at least every 5 weeks a reconciliation of the bank balance for the account with cash book balance and client ledger total

Question 13

what is a TPMA (third party managed account)?

Answer 13

accounts at banks in the named of third parties who are authorised payment institutions regulated by the FCA

Question 14

is a TPMA client money?

Answer 14

no because it is not held or received by the authorised body

Question 15

does the authorised body need permission from SRA to use a TPMA?

Answer 15

no dont need permission but do need to inform the SRA if they use one (or more) or stop using one

Question 16

if you have already paid for costs and you receive money from the client - which account do you put this money in?

Answer 16

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.

Question 17

if you give the client a bill for your legal services and they pay you - which account does this go in?

Answer 17

business account as they are paying for your services therefore, belong to the business

Question 18

what is a mixed payment?

Answer 18

a payment which includes both client money and non-client money

Question 19

if client pays a mixed payment into a business account - what do you do?

Answer 19

you must promptly move the client money element into the client account

Question 20

if client pays a mixed payment into a client account - what do you do?

Answer 20

you must promptly move the business money into the business account

Question 21

what should withdrawals/transfers/payments in to a client account be in respect to?

Answer 21

they should be made in respect of the delivery of your regulated services (eg, your legal services to your client)z