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What can law firms do to make themselves more Accounts Rules compliant?

With most law firms' new financial year starting in April or May, we’ve put together some handy housekeeping tips which will help make your firm more Accounts Rules compliant.

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+44 (0)20 7556 1482
watkinsc@buzzacott.co.uk

New SRA Accounts Rules are expected to be implemented in April 2019.  They are not likely to affect the points raised in this article.  We still expect Rule 14 (banking facilities) to be a key area of concern for the SRA.  Bank reconciliations and old residual balances will still be areas where having robust procedures in place can prevent reportable breaches.

Top tips to stay compliant

1. Ask yourself whether the payment you’re about to make from the firm’s Client Account is part of the underlying transaction for which you are engaged. If it isn’t clear, question why the payment shouldn’t be made by the client personally and whether the firm is unwittingly providing a banking facility. (SRA Rule 14.5)

2. If you’re a partner signing off the monthly bank reconciliations, make sure you understand how the reconciliation works. There should be three elements to it: (a) compare the bank statements against the balance recorded in your accounting records; (b) where they are not the same, question why that is and whether, for example, a receipt has gone unrecorded; (c) compare the reconciled balance against the total client ledger balance. (SRA Rule 29.12)

3. Routinely review the client matter listing to check for any overdrawn or residual balances and investigate them straight away. (SRA Rules 20.9 and 20.2).

These are still the most commonly found breaches and a Rule 14.5 breach would almost certainly be reportable.

Claire Watkins

Partner, Head of Professional Practices Group

E | Watkinsc@buzzacott.co.uk

T | +44 (0)20 7556 1482

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