Compliance Flashcards
What count as ‘accounting records’ and how long must they be stored for?
All accounting records should be securely stored and retained for at least 6 years
Accounting records includes:
- Reconciliations
- Bank statements
- Electronic records
- Accountant’s reports
- Documents relating to TPMAs
When are firms required to get an accountant’s report?
Firms which have held or received client money, or operated a joint account or a client’s own account as signatory, must obtain an accountant’s report for that accounting period within 6 months of the end of that period
- Failing to do this is a serious regulatory matter
- This ensures compliance with SRA Accounts Rules
What must the accountant immediately report to the SRA?
Accountants must immediately report to SRA any evidence of theft or fraud or concerns about a firm’s fitness to hold client money
When must the accountant deliver their report to the SRA?
The accountant’s report must be delivered to SRA within 6 months of the end of accounting period, if it is ‘qualified’ to show a failure to comply with the Rules
- Obligation to submit lies with firm and managers
SRA doesn’t define ‘qualified,’ but there are Serious factors (1 or more likely a qualification) and Moderate factors (1 or more may lead to qualification, depending on context)
Serious factors include:
- Significant shortfalls on client account
- Client account bank reconciliations not carried out
- Client account improperly used as a banking facility
- Significantly deficient accounting records
- Actual or suspected fraud or dishonesty by the firm
When will a firm not be required to prepare an accountant’s report?
Firms not required to obtain an accountant’s report if:
- (a) All money held or received is from the Legal Aid Agency
- (b) In the accounting period, the total balance of all client accounts plus any joint accounts and clients’ 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 in foreign currency
When else might the SRA require an accountant’s report, if they think it necessary?
SRA may require a firm that is shutting down to submit a final accountant’s report, if it thinks it necessary
What qualifications does the accountant need?
Accountant must be a member of a chartered accountancy body and is or works for, a registered auditor
When can the SRA disqualify an accountant from preparing a report?
They have been found guilty of professional misconduct; or
SRA satisfied that they have failed to exercise due care and skill in preparation of the report
What information must a firm provide an accountant when they are preparing their report?
Firms must provide the accountant preparing a report with:
- (a) details of all accounts held at any bank, building society or other financial institution at any time during the accounting period to which the report relates; and
- (b) all other information and documentation that the accountant requires to enable completion of their report.
