solicitors accounts Flashcards
if you lose client money or it is taken = what must you do?
must report the breach to the client promptly (even if the money has been replaced)
who is responsible for compliance with SRA account rules?
authorised body’s managers are jointly and severally liable
how long must you store accounting records (bank and building society statements)?
must store all accounting records securely and retain these for at least 6 years
how long do authorised bodies holding client money need to obtain accountant’s report?
need to obtain within 6 months of the end of the accounting period
what are the 2 exemptions of when you do not need to obtain an accountant’s report?
a) if all client money held is from the legal aid agency; or
b) if client account(s) average balance is below £10,000 and maximum balance is below £250,000
is a third party managed account client money?
no it is not client money
do you need to get permission from SRA to use a third party managed account?
no, you dont need permission from SRA to use one however, you should tell them if you are using one
who do SRA account rules apply to?
authorised bodies, their managers and employees
what are common examples of client money?
- money received in relation to unpaid disbursement (costs)
- money received from client at start of transaction ‘on account for costs’ which haven’t been paid yet
- deposit money received and held by you as agent or stakeholder on property sale
- money received in respect of your fees before bill has been sent to client for those fees
what entries need to be made for client money received (double entry)?
credit client ledger client account for that client
debit cash sheet client account
what entries need to be made for withdrawing client money? (double entry)
debit client ledger client account for that client
credit cash sheet client account
what entries need to be made for non-client money received?
- credit client ledger business account for that client
- debit cash sheet business account
what entries need to be made for non client money withdrawn?
- debit client ledger business account for that client
- credit cash sheet business account
what entries need to be made for non-client money paid out from petty cash?
- debit client ledger business account for that client
- credit cash sheet petty cash
if you are holding client money and you need to pay some or all of that to be used for your costs - what do you do?
must give a bill of costs, or other written notification of costs incurred, to client or paying party
must be done before you transfer client money from client account to make payment
any such payment must be for the specific sum identified in bill of costs
what entries need to be made for transferring money from client account to business account?
- debit client ledger for that client
- credit cash sheet client account
- credit client ledger business account for that client
- debit cash sheet client business account
what entries need to be made for transferring money from business account to client account?
- debit client ledger business account for that client
- credit cash sheet business account
- credit client ledger client account for that client
- debit cash sheet client account
what entries need to be made for mixed money when splitting a cheque?
- credit client ledger client account for that client
- debit cash sheet client account
- credit client business ledger account for that client
- debit cash sheet business account
what entries need to be made when transferring money from one client account to another? (between 2 clients)
- debit client ledger client account for client transferring the money
- credit client ledger client account for client receiving the money
if a seller’s solicitor is holding the deposit as a stakeholder - can they release the money automatically at completion?
no, they cannot as they cannot release the deposit to the seller without the buyer’s consent. under stakeholder arrangement, the deposit is held in trust for both parties and cannot be handed over to one party without consent of the other
what does accounting to the client mean?
it means that you give them the interest (not just telling the client the interest has been earnt)
what entries need to be made for issuing a bill plus VAT?
debit client ledger business account for that client with the amount of the profit costs
credit profit costs [account] with the amount of the profits costs
debit client ledger business account for that client with the amount of the VAT on the costs
credit VAT account [ledger] with the amount of the VAT on the profit costs
what entries should be made if there is receipt of payment of bill and VAT (eg, non-client money received)?
- credit client ledger business account for that client
- debit cash sheet business account
what entries need to be made when interest has been generated in the client account and needs to be paid to the client?
debit interest payable ledger
credit cash sheet business account
credit client ledger client account
debit cash sheet client account
what must the firm do if interest has been generated in the general client account?
must pay it into the firm’s business account and then from there the firm must calculate and pay a fair sum of interest to each client whose money was held
