Records, reconciliation and reports

Question 1

How must firms keep accounting records?

Answer 1

Accurate, contemporaneous and chronological

Question 2

What are the rules for client ledgers?

Answer 2

• they must use separate client ledgers for each client and matter
• they must label each client ledger with ‘client ledger’ and include the client’s name and description of legal matter
• must record receipts and payments of client money on the client side of the ledger
• must record receipts and payments of business money including bills for profit costs on the business side of the ledger

Question 3

What is the rule for balances on client ledgers?

Answer 3

Firms must keep a running total of all monies owed to clients

Question 4

What is the rule for cash sheets?

Answer 4

Firms must keep a cash sheet with a running total of all client account transactions

Question 5

What is the rule for profit costs ledgers?

Answer 5

The firm must have a central record of all bills

Question 6

What is the rule for transfer journal?

Answer 6

Firms should have a separate record of all inter-ledger transfers

Question 7

How often are firms required to obtain bank statements for their client and business accounts?

Answer 7

Every 5 weeks

Question 8

How often must a firm undertake reconciliation of accounts?

Answer 8

Every 5 weeks

Question 9

Who must sign off the reconciliation statement?

Answer 9

The firm’s compliance officer for finance and administration or a manger of the firm

Question 10

How often are law firms required to employ an independent accountant to write a report for their accounts?

Answer 10

Every accounting period within 6 months of the end of the period

Question 11

What happens if an accountant’s report is qualified?

Answer 11

This means there has been a breach meaning client money is or could be at risk and the firm must send a copy of the report to the SRA within 6 months of the end of the accounting period

Question 12

When must accountants report to the SRA any evidence of theft or fraud of client money or concerns about fitness to hold client money?

Answer 12

Immediately

Question 13

When must firms and solicitors report to the SRA any serious breaches of the Account rules?

Answer 13

Promptly

Question 14

How many years must a firm retain and store securely all accounting records?

Answer 14

6 years