What should happen if client money is lost/taken?
must report breach to SRA promptly
How often does the SRA suggest accounts should be reconciled?
every 5 weeks
Who is responsible for keeping client money safe?
All solicitors
Under SRA rule 1, who is responsible for compliance with SRA accounts rules and how are they liable?
Managers of authorised bodies
Jointly and severally
What is the fundamental principle in relation to client money
Must be kept separate to authorised body’s
What is rule 12.1 relating to when client money is held/received/operated joint account/signatory during an accounting period?
- 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
What is rule 12.2 regarding when an accounting report is not needed?
- Client money held during accounting period is received from Legal Aid Agency
- Balance doesn’t exceed
o Average £10,000
o Maximum £250,000
What is rule 12.4 regarding when the SRA on reasonable notice may require an accountant’s report?
if cease to operate as authorised body or
SRA considers in public interest
What are the requirements for the accountant who prepares the accountant’s report?
must be member of chartered accountancy body + work for/be a registered auditor
When may the SRA disqualify an accountant from preparing the accountant’s report?
- Found guilty of professional misconduct or
- SRA thinks failed to exercise due care and skill
How long must accounting records be retained for?
at least 6 years
What are the rules that apply to joint accounts?
- Obtain, at least every five weeks, statements
- Keep readily accessible central record of all bills/notifications of costs
What are the rules that apply to client’s own accounts?
- 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
What is rule 11.1 regarding when enter into arrangements with a client to use a third party managed account?
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
Where arrangements to use a third party managed account is allowed, what must happen?
obtain regular statements from third party and ensure they accurately reflect all transactions
Does the rule on obtaining an accountant’s report apply to third party managed accounts?
No
Does the rule on retaining accounting records apply to third party managed accounts?
Yes
What does the SRA expect in relation to third party managed accounts?
to be notified of all providers used and any switches or if they stop using
