SRA accounts rules

Question 1

What should happen if client money is lost/taken?

Answer 1

must report breach to SRA promptly

Question 2

How often does the SRA suggest accounts should be reconciled?

Answer 2

every 5 weeks

Question 3

Who is responsible for keeping client money safe?

Answer 3

All solicitors

Question 4

Under SRA rule 1, who is responsible for compliance with SRA accounts rules and how are they liable?

Answer 4

Managers of authorised bodies
Jointly and severally

Question 5

What is the fundamental principle in relation to client money

Answer 5

Must be kept separate to authorised body’s

Question 6

What is rule 12.1 relating to when client money is held/received/operated joint account/signatory during an accounting period?

Answer 6

• Obtain accountant’s report for accounting period within 6 months of end of period and
• Deliver to SRA within 6 months of end of accounting period if failure to comply and money is at risk

Question 7

What is rule 12.2 regarding when an accounting report is not needed?

Answer 7

• Client money held during accounting period is received from Legal Aid Agency
• Balance doesn’t exceed
  o Average £10,000
  o Maximum £250,000

Question 8

What is rule 12.4 regarding when the SRA on reasonable notice may require an accountant’s report?

Answer 8

if cease to operate as authorised body or
SRA considers in public interest

Question 9

What are the requirements for the accountant who prepares the accountant’s report?

Answer 9

must be member of chartered accountancy body + work for/be a registered auditor

Question 10

When may the SRA disqualify an accountant from preparing the accountant’s report?

Answer 10

• Found guilty of professional misconduct or
• SRA thinks failed to exercise due care and skill

Question 11

How long must accounting records be retained for?

Answer 11

at least 6 years

Question 12

What are the rules that apply to joint accounts?

Answer 12

• Obtain, at least every five weeks, statements
• Keep readily accessible central record of all bills/notifications of costs

Question 13

What are the rules that apply to client’s own accounts?

Answer 13

• Obtain, at least every five weeks, statements
• Keep readily accessible central record of all bills/notifications of costs
• complete, at least every 5 weeks, reconciliation of bank statements balance with cash book balance and client ledger

Question 14

What is rule 11.1 regarding when enter into arrangements with a client to use a third party managed account?

Answer 14

a) Doesn’t result in you receiving/holding client money +
b) Reasonable steps to ensure, before accepting instructions, client understands
a. Terms and fees and how they will be paid
b. Right to terminate and dispute payment requests

Question 15

Where arrangements to use a third party managed account is allowed, what must happen?

Answer 15

obtain regular statements from third party and ensure they accurately reflect all transactions

Question 16

Does the rule on obtaining an accountant’s report apply to third party managed accounts?

Answer 16

No

Question 17

Does the rule on retaining accounting records apply to third party managed accounts?

Answer 17

Yes

Question 18

What does the SRA expect in relation to third party managed accounts?

Answer 18

to be notified of all providers used and any switches or if they stop using