Client Money Flashcards
Types of bank accounts that can be held by a firm
1 )General account - Holds all money for a number of clients in one account
2) Discrete/ Designated client account - Hold the money for one client
When the firm is choosing the type of bank account
Make sure its they are instant access accounts - Which provides client funds to be paid in and out of the account immediately
60 – 90 day notice account - Ensure that you have written permission from the client and terms of business must clearly state the account conditions placed on the account
Interested on client account – should be paid to the client
(Bank charges - Considered a firm expense a cost to your business not your clients.)
RICS requirements for titling for a general client account
would expect to see the ‘‘firms name’’ then the word ‘client’ in full
RICS requirements for a Discrete/ Designated client account
We would expect to see the word ‘client’ in full, the firms name and, the clients name.
(You can abbreviate the firms name and the clients name if the names are too long for account name. however, the name must be recognizable to who this firm is and who the client is)
RICS requirements for titling the bank account
Must have the word client in full in the bank account title
Abbreviate issue on accounts
If abbreviated names become an issue firm’s have been known to put the abbreviated name, then the clients name in full next to help identify each account.
Bank operation condition letter
the bank will provide you with this letter
Letter State –
o the account will or won’t bear interest or charges
o Any interest payable will be paid to the client account
Invoice system (purchase order system or works order system or by email)
invoice check against purchase order (address, date amount, VAT) – signed off then passed to accounts – signatory check to payment against the purchase and then signed off.
How long are firm required to retain records
Firms are required to retain these records for a minimum of 6 years, either in paper or electronic format
Accounting systems types
Types - manual or computerized (RICS does not have a preference of which accounting system to use).
Overdrawn accounts
Overdrawn accounts – (should never been overdrawn at any time)
If a risk of overdrawn - option
– contact the client to transfer funds,
- Transfer funds from the office account to cover the shortfall
When should reconciliation be done
Should be completed on a monthly basis
General client account – bank account to cash book and cash book to list of client balances
Should be reviewed by a Principle over the firm and Signed off by the staff member who prepared the reconciliation.
Should be supported by documentation
RICS - rules of conduct for - Professional indemnity insurance and what is it
The purposes of having professional indemnity insurance are to: • ensure that if the firm faces a claim, it is protected from financial loss that it cannot. meet from its own resources; • protect the insured member or firm against the consequences of its liability to pay.
A firm shall ensure that all previous and current professional work is covered by adequate and appropriate professional indemnity insurance cover which meets standards approved by the Regulatory Board’’.
(PII protects the firm from fraud or theft of the client money)
The Insurer must be on the RICS approved list with no unusual exclusions listed within the policy.
Ensure there is a retroactive date within the policy.
Money laundering
disguise the original ownership and control of the proceeds of criminal conduct by making such proceeds appear to have derived from a legitimate source.
The main money laundering offences apply to everyone, and you commit an offence if you know or suspect that the property is criminal property.
