Solicitor Accounts Flashcards

complete

1
Q

How often are periodic statements and reconciliation required?
- Statements obtained from financial institution where client money is held
- Reconciliation of statement balance with the cash book balance and the client ledger total, signed off by COFA or firm manager

A

At least every 5 weeks

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2
Q

Term for account showing a running total of all transactions through client accounts held or operated by the solicitor/firm

A

Cash book

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3
Q

What is the exception in which client account systems and controls do not apply?

Must still obtain statements and keep a record of bills

A

When money held or received jointly with client and third party

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4
Q

How long after the end of the accounting period must the accountant’s report be delivered to the SRA if client money is held or received, or the solicitor operates a joint account or a client’s own account as signatory?

A

Within 6 months

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5
Q

In which 2 cases is an accountant’s report NOT required if client money is held or received, or the solicitor operates a joint account or a client’s own account as signatory?

A
  • All client money held or received during the accounting period is money received from the Legal Aid Agency
  • The total balance of all client accounts held or operated during the accounting period does not exceed an average of £10,000 and a maximum of £250,000
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6
Q

How long must accounting records be retained for?

A

At least 6 years

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7
Q

Client money must be paid promptly into a client account. Though “promptly” is not defined, what is it likely to mean?

A

Same or next working day

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8
Q

What are the only 3 situations money can be withdrawn from a client account?

A
  • For the purpose for which it is being held
  • Following receipt of instruction from the client
  • On the SRA’s prior written authorisation
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9
Q

What must the firm do if it draws upon a cheque that later dishonoured by the bank?

A

Immediately transfer the amount by which the client account is overdrawn from the business account to the client account

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10
Q

Term for money received by firm which includes funds which belong to the client as well as the firm itself

A

Mixed receipts

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11
Q

What are the following exemptions for
- A solicitor holds the money as trustee and paying the money would conflict with their obligations
- The client money represents payments received from the Legal Aid Agency for the firm’s costs
- An alternative agreement has been agreed in writing with the client or third party for whom the money is held

A

Paying client money promptly into a client account

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12
Q

What are the 2 options for dealing with mixed receipts?

A
  • Split the cheque (rare)
  • Deposit in either client or business account and transfer
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13
Q

Money received to cover unpaid disbursements should be placed in which account?

A

Client account

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14
Q

Term for transferring money from one client’s account to another’s (e.g. for payment of a debt), also known as paper transfer

A

Inter-client transfer

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15
Q

What is the type of VAT charged by a business to its customers?

A

Output VAT

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16
Q

What is the type of VAT charged to a business by its suppliers?

A

Input VAT

17
Q

What type of payment?
- Firm paid a supplier on client’s behalf acting as client’s agent
- Client received, used, or benefitted from goods/services paid for by firm on their behalf
- Client was responsible for paying third party
- Client authorised firm to make payment on his behalf
- Client is aware the good/services were from another supplier

A

Disbursement

18
Q

Which method of invoice treatment is used when an invoice is addressed to a client?

A

Agency method

19
Q

Which method of invoice treatment is used when an invoice is addressed to a firm?

A

Principal method

20
Q

Which account will an invoice addressed to the firm for a service carried out for a client be paid from?

A

Business account

Even if client account has sufficient money

21
Q

What is the process when a firm receives an invoice for client’s counsel fees in the firms name?

A

Cross out firm’s name and replace with client’s name

22
Q

Which account is used for petty cash payments on behalf of a client?

A

Business account

23
Q

What amount of interest of client/third party money held by a firm must be accounted to the client/third party?

A

A fair sum

24
Q

What should be presented to a client at the outset of any transaction reagarding accounting for interest?

A

Written policy on the payment of interest which seeks to provide a fair outcome

25
Q

Term for policy in which ‘no interest shall be paid on any individual client’s funds where the firm holds less than £20 for them’

A

De minimis policy