Compliance Flashcards
Explain the provision of rule 12.1 of the SRA accounts rules.
Firm’s which have at any time during the accounting period held or received client money, or operated a joint account (or a client’s own account as a signatory), must obtain an accountant’s report for that accounting period within 6 months of the end of the period.
Failure to do so is a serious regulatory matter for the SRA.
Who has the obligation to submit the accountant’s report?
The firm and its managers.
List the serious factors which are likely to show a failure to comply with the SRA accounts rules.
1) Significant or unreplaced shortfall on the client account, including money held elsewhere, unless caused by a bank error and rectified promptly.
2) Systemic billing for fees/ disbursements which have not been incurred and payments in respect of that bill being made into the business account.
3) Evidence of disregard for the safety of client money and assets.
4) Actual/ suspected fraud or dishonesty by the managers/ employees of the firm.
5) Accounting records not available or significantly deficient or bank accounts/ledgers failing to include reference to a client.
6) Failure to provide documentation requested by the reporting accountant.
7) Client account bank reconciliation not carried out.
8) Client account improperly used as a banking facility.
What does rule 12.2 of the RA accounts rules provide?
Firm’s are not required to obtain an accountants report if:
1) all client money held or received during an accounting period is money received from the Legal Aid Agency; or
2) in the accounting period, total balance of all client accounts plus any joint accounts and client’s own accounts operated by the firm does not exceed:
i) an average of £10,000; and
ii) a maximum of £250,000 (or the equivalent foreign currency).
Explain the provision of rule 13.1 of the SRA accounts rules.
All accounting records should be securely stored and retained for at least 6 years.
When does an accountants report need top be submitted?
When it is qualified (ie there is indication of a serious breach).
