Solicitor Accounts Flashcards
To whom do the Solicitors Regulation Account Rules 2019 apply?
Authorised bodies
Managers of firms
Employees of firms
Who are authorised bodies?
A body that has been authorised by the SRA to practice as a licensed body, recognised body and sole practitioner’s practice
What do the rules require regarding client and business money?
They must be kept separate
What is client money?
Money held or received for a client or as a trustee plus all other money, which is not business money
What is business money?
Money which belongs to the solicitor or the practice
What are examples of client money?
- Relating to regulated services deliver by you to a client
- On behalf of a third party in relation to regulated services
- As a trustee or as a holder of a specified office or appointment
- In respect of your fees and any unpaid disbursements if held or received prior to delivery of a bill for the same
What are regulated services?
Legal and professional services provided that are regulated by the SRA and includes where appropriate, acting as trustee or as the holder or a specified office or appointment
Must a firm have a client account?
Yes
What are the requirements of a client account?
Name must include the name of the firm and the word ‘client’
What are the restrictions on a client account?
Must not be used to provide banking facilities to clients or third parties and payments in and out of the account must be in respect of the delivery of regulated services
What must the client account records contain?
- All receipts and payments of client money on the client side of the client ledger account
- All receipts and payments which are not client money or bills of costs on the business side of the client ledger account
What balances must be maintained?
A list of all the balance shown by the client ledger accounts of the liabilities to clients with a running total of the balances.
A cashbook should also be provided showing a running total of all transactions through client accounts held or operated by the solicitor/firm
How often should statements be generated?
At least every 5 weeks
What are the requirements regarding periodic reconciliation of accounts?
Statements will be obtained from financial institutions where client money is held for all client and business accounts held or operated by the firm.
For all client accounts held or operated, a reconciliation should be completed of the statement balance with the cash book balance and the client ledger total a record must be signed off by the Compliance Officer for Finance and Administration
Where should a record of billed be kept?
At the office and be made readily available
What is the exception to reconciliation of the accounts?
When money is held or received jointly with the client and a third party.
When must an accounts report be submitted to the SRA?
Within 6 months of the end of the period
What is the consequences if the accountant’s report is not submitted to the SRA in the timescale noted?
Breach of the SRA rules as the client money is likely to be placed at risk
When will an accountant’s report not be required to be submitted with the SRA?
- All client money held or received during an accounting period is money received from the Legal Aid Agency
- In the account period, the total balance of all clients accounts held or operated does not exceed an average of £10,000 and a maximum of £250,000
How long must accounting records be held?
At least 6 years
Who must sign the accountant’s report?
Must be prepared and signed by an accountant who is a member of one of the chartered accountancy bodies and who is, or works for, a registered auditor
What are the timescales for when client money must be paid in?
Promptly
What are the exceptions as to when client money must be paid promptly into a client account?
- Where money is received in relation to unpaid fees or disbursements
- Any money held for disbursements relates to costs or expenses incurred on behalf of the client and for which the solicitor/firm are liable
- The solicitor/firm does not for any other reason maintain a client account
- If the client has been informed in advance of where and how the money will be held
What is meant by ‘promptly’?
Not defined in the Rules however it is likely to mean on the day of receipt or next working day