Steve Collings considers some of the emerging questions that are being asked as part of the overhaul of solicitors accounts rules and the ‘outcomes-focused’ regime which now governs the way providers of legal services are regulated.
Now administered by the Solicitors Regulation Authority (SRA), the fourth update of SRA Accounts Rules 2011(SAR) were published on 21 June 2012. As well as a slight change of title from the previous 'Solicitors' Accounts Rules', the overhaul has raised a number of other questions for accountants working with law firms. Some of the most pressing ones are considered in the full article, including:
- Q. I am a reporting accountant for a law firm with a 31 March 2012 year-end. Do I just use the new 2011 rules?
- Q. My client has received client money which it has invested in stocks and shares. Is this money still client money?
- Q. A solicitor’s client paid a cheque to the practice which was subsequently paid into client account. This cheque then bounced and was debited to the client account. Is this a breach of the rules?
- Q. My client lost their bookkeeper at the start of the financial year and the bookkeeping is now significantly behind. Is there anything I need to report to the SRA in my accountant’s report?
- Q. I have recently had a regulatory visit from my professional body who has stated that while I obtained copies of cheques from my solicitor client, such photocopied cheques are not permissible. Is this really the case?
- Q. I act as both bookkeeper and reporting accountant for my solicitor client. I am worried that there may be a breach in the rules?
- Q. Is it permissible for my solicitor client to drop off their files, books and records to my office rather than me attend their premises to undertake the work required for the accountants report?
- Q. I am preparing the accountants report for a newly-formed firm of solicitors. The bank did not include the word ‘client’ in the name of the bank account for a short period of time after the account was opened. Am I correct to treat this as a trivial breach and not qualify my report in this respect?
- Q. On 1 November 2011 my sole practitioner solicitor client died and the client account was subsequently frozen resulting in some overdrawn client accounts. Would this result in a qualified report?
- Q. My solicitor client has been unable to raise a bill of costs to a client because the client is untraceable. Can he simply do a transfer from the client account to office account as he has raised the bill of costs?Q. I have heard that solicitor clients are ‘high risk’ – why is this?
Steve Collings is the audit and technical partner at Leavitt Walmsley Associates and the author of ‘Interpretation and Application of International Standards on Auditing’. He is also the author of ‘The AccountingWEB Guide to IFRS’ and ‘IFRS For Dummies’ and was named Accounting Technician of the Year at the 2011 British Accountancy Awards. Register for free and log into AccountingWEB.co.uk to read his full answers to these questions.