I have produced two sets of accounting records for solicitor clients.
The first client I have not had a problem with the client account auditor. The new client has had problems with a different client account auditor.
He has said that I have not produced double entry bookkeeping. My client has explained the problem further by saying “It relates to there not being a double entry system for each file for office and client he cited as you have seen rule 29 this is a real problem.”
I have produced accounts in exactly the same way for both clients. The transactions on the office account have been analysed by income/expense. The transactions on the client account have been analysed by client. I fail to see what else he requires. I will ask him but I think he wants to see ledgers for each client rather than the total transactions on the client account with a column for each client.
Also he wasn’t happy with me not producing bank reconciliations. I pointed out that the client account was prepared from the bank statements and therefore agreed to the bank statement. I had to produce a schedule for each month showing the bank statement balance and the client account balance as well as a zero difference between the two.
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With great respect...........
................ it appears that you are not conversant with the requirements of the Solicitors Accounts Rules.
By "Auditor", I presume you mean the accountant that your client has retained to do the Accountants Report as required by the Law Society of England.
If I was this accountant, I would be tearing my hair out!
If your aim is to produce accounting records that are compliant with the SARs, then I would suggest that you download a copy from the Law Society and read, mark, learn and inwardly digest.
Sounds like you do have a problem
You are required to prepare bank reconciliations at a minimum once every five weeks. In practice that means monthly, but the rules allow you to for example do it on the last Friday of every month.
Each client should have a ledger card with four columns - Office DR, Office CR, Client DR, Client CR. Money paid in by the client goes to the client account, and any disbursements paid out of that money are charged to the client account. If there isn't enough money in the account at the time of payment, it has to be charged to the office account, and paid out of that bank account, and then the money transferred from client to office to clear the outstanding invoice later when funds are available. It doesn't look like your summaries comply with that requirement.
I would suggest you familiarise yourself with the Oyez system for doing solicitor accounts manually. Then you will be able to set up Excel sheets that perform the same task. Alternatively, get some accounts software that is designed for solicitor accounts.
Use this as a networking exercise
I agree that it would appear you are not fully compliant, and therefore goes some way to show the quality of SAR reviews between different accountants.
Use this exercise as a way of perhaps linking with the new accountant as if you get things right and can work closely together, rather than against, it may yeild other solicitor clients in the future? you never know.
Why not be proactive and ask the acocuntant to provide you with a comprehensive list of suggested improvements and then show your solicitor client that you have the aptitude to have a good close working relationship with the accountants. You may end up doing more work and therefore increasing your fee from them.
Another point
The monthly client account bank reconciliations must be reviewed at the time by a partner of the solicitor firm and evidence kept of this.
Sounds like the Solicitor concerned has never read the SARs either - not that that is that uncommon, but it looks like a disaster waiting to happen with the Law Society coming down and ripping their systems to pieces.
Also the "first auditor" has either been spending an inordinate amount of time putting things right or they also have never read the SARs.
Sorry to be so negative but this is one area that ICAEW regard as very, very high risk. Warning bells should be going off all over the place.
@friendlyaccountant
You can buy the Oyez cards here - http://www.oyezstore.co.uk/f_chapters/102_254.htm . They are not cheap to buy.
Yes you do need 4 columns. The office columns are like the sales ledger in a normal set of accounts. It must always have a debit or zero balance, otherwise you are holding client money in the office account, which is illegal. The client account must always have a credit or zero balance, and be matched by an equal amount of money in the client bank account, otherwise the client is borrowing money from other clients.
If you mean one office column and one client column and use negative numbers for credits in both, I think that would be allowed.