Solicitors' Accounts

Question 1

What are the four things considered client money?

Answer 1

Money held or received:

1. Relating to regulated services delivered to a client
2. On behalf of a third party related to regulated service
3. As trustee or holder of specified office or appointment
4. In respect of fees and unpaid disbursements prior to a bill for these

Question 2

With what institutions in what countries must a client bank account be maintained, and what word should any such account which also contains the name of the firm contain?

Answer 2

Bank or building society in England and Wales.

Account with name of firm must contain the word client.

Question 3

Where are receipts in and payments out of (1) client money and (2) non-client money recorded in the client account?

Answer 3

1. Receipts and payments of client money on the client side of the client account
2. Receipts and payments which are not client money, bills, or costs on the business side of the client account

Question 4

What two things trigger the requirement for an accountant’s report?

Answer 4

1. Client money is held or received
2. Solicitor operates a joint account or client’s own account as signatory

Question 5

How soon must client money be paid into a client account?

Answer 5

Promptly

Question 6

Although promptly is not defined in the current rules, what is it likely to mean based on the previous rules?

Answer 6

On the day on receipt or the next working day

Question 7

In the cash account, where is money received by the firm (from or for the client) recorded, and why?

Answer 7

Debit on the client side, because it is money owed to the client

Question 8

In the cash account, where is money paid by the firm (for or on behalf of the client) recorded, and why?

Answer 8

Credit on the client side, because it is money the firm is owed by the client

Question 9

To make sense of the debit and credit entries, what is the best way to think about the client side of the cash account?

Answer 9

It is a record of the firm’s liability to the client. Client money received is a debit because it represents a liability the firm owes to the client. Money paid on behalf of the client represents a credit because it is money owed to the firm (an asset).

Question 10

To make sense of the debit and credit entries, what is the best way to think about the client side of the client account?

Answer 10

It is a record of the client’s money, expressed as it would be if they were managing the account themselves. Money in is a credit (asset) and money out on their behalf is a debit (liability).

Question 11

What topics does the full Solicitors’ Accounts deck contain, and how do I access it?

Answer 11

The full deck contains over 50 flashcards dealing with the SRA syllabus:

• General Concepts;
• Dealing with Client/Business Funds;
• Dealing with VAT;
• Deposits Held as Agent/Stakeholder;
• Petty Cash;
• Accounting for Interest.

Access is currently £25 per full subject, e.g. Solicitors’ Accounts, or £250 for access to all 16 SQE1 decks / £200 for 13 SQE2 decks. Visit www.cleverprep.co.uk to arrange full access.