SRA Accounts Rules Flashcards
What is SRA Accounts Rule 1?
Rule 1 – Application Section
- Rules apply to authorised bodies, managers and employees
- Law firm managers are jointly and severally responsible for compliance by everyone in the firm
What is SRA Accounts Rule 2?
Rule 2 – Client money
- Defines client money
- Client money should be paid promptly into a client account, unless an exemption applies
- Client money must be available on demand, unless otherwise agreed in writing with the client
- Client money must be returned promptly to the client as soon as there is no proper reason to hold the funds
What is SRA Accounts Rule 3?
Rule 3 – Client account
- Client account must be in a bank in England + Wales
- Client account name must include the name of the authorised body and the word client
- Firms must not provide banking facilities using a client account
What is SRA Accounts Rule 4?
Rule 4 – Client money must be kept separate
- Client money must be kept separate from business money
- Mixed payments must be allocated promptly to the correct account
Where a firm is holding client money and some will be used for costs:
- Firm must give a bill of costs to client before any transfer from the client account
- Firm must use the amount they transfer for the specific sum in the bill
What is SRA Accounts Rule 5?
Rule 5 – withdrawals from client account
Money should only be withdrawn from a client account:
- For the purpose for which it is being held
- Following receipt of instructions from client
- On the SRA’s prior written authorisation or in prescribed circumstances
Withdrawals from a client account should be appropriately authorised and supervised
Withdrawals should only occur if sufficient funds are held for that specific client
What is SRA Accounts Rule 6?
Rule 6 – duty to correct breaches upon discovery
- Firms must correct any breaches promptly on discovery
- Any money improperly withheld or withdrawn from a client account must be immediately paid into the account or replaced as appropriate.
What is SRA Accounts Rule 7?
Rule 7 – Payment of interest
- Must account to clients for a fair sum of interest on any client money held on the client’s behalf
- Can come to a different arrangement via written agreement, but client must have sufficient information to give informed consent
What is SRA Accounts Rule 8?
Rule 8 – client accounting systems and controls
Firms must keep accurate, contemporaneous and chronological records of:
- Receipts and payments relating to each client
- All balances shown by the client ledger accounts
- A cash book, showing a running total of all transactions
Firms must obtain bank statements for all client accounts every 5 weeks
Firms must complete a bank statement reconciliation of all client accounts every 5 weeks
Firms must keep a readily accessible central record of all bills given by the firm
What is SRA Accounts Rule 9?
Rule 9 – Operation of joint accounts
If a firm holds money jointly with the client, limited rules apply:
- Obtain statements every 5 weeks
- Must keep a readily accessible central record of all bills issued
What is SRA Accounts Rule 10?
Rule 10 – Operation of client’s own account
If a firm operates a client’ own account as signatory, limited rules apply:
- Obtain bank statements every 5 weeks
- Reconciliations every 5 weeks - no breach if the firm cannot do this, if they have taken reasonable steps to satisfy themselves that the money is not at risk and have recorded the position appropriately
- Must keep a readily accessible central record of all bills issued
What is SRA Accounts Rule 11?
Rule 11 – Third party managed accounts
Firms can agree with clients to use a third party managed account, provided:
- Use of the account does not result in the firm receiving or holding client money
- Firm takes reasonable steps to ensure client understands the terms of the TPMA contractual agreement, what fees are involved and who pays them and their right to terminate
Firm must also obtain regular statements from the provider of the TPMA and ensure they accurately reflect all transactions on the account
What is SRA Accounts Rule 12?
Rule 12 – Obtaining and delivery of accountant’s reports
- Firms dealing with client money must obtain an accountant’s report within 6 months of the end of the accounting period and deliver it to the SRA in this timeframe, if it qualified to show a failure to comply with the rules
- Some firms don’t have to do this
- SRA might require the same when a firm shuts down
- The report must be prepared and signed by a chartered accountant who is, or works for, a registered auditor
- SRA can disqualify an accountant from issuing a report
- Firms must give accountants all account details and anything else they need to complete the report
What is SRA Accounts Rule 13?
Rule 13 – Storage and retention of accounting records
- Firms must store all accounting records securely and retain them for at least 6 years
