Keep your client account clean and compliant
Every law firm authorised by the Solicitors Regulation Authority (SRA) has a mandatory requirement to comply with the SRA Accounts Rules. We help you get your processes right, check them independently and prepare for your accountant’s report.
Key duties under the Accounts Rules
The deadlines and checks every firm should have in place.
- 1Reconcile client accounts at least every five weeks, signed off by your COFA or a manager
- 2Keep client money separate from office money and pay it in promptly
- 3Return client money promptly once there is no longer a reason to hold it
- 4Obtain an accountant’s report within six months of each accounting period end, unless exempt
- 5Record breaches, and report serious ones to the SRA
From April 2027 every accountant’s report must be submitted to the SRA.
Breaches happen in firms of every size
Breaches aren’t just a small firm problem, despite the popular assumption that it’s SMEs who are the riskiest.
Breaches aren’t just a big firm problem either, although these are the businesses where the stakes are highest and the implications furthest reaching.
The steps to compliance
So, what do you need to do to keep your accounts clean, pristine and secure? Here are a few tips to help you out.
Make sure your financial management processes are robust
Clearly documented, robust accounting controls, which are not just ‘assumed’ to be happening but are checked by an internal audit function, go a long way towards compliance. From reconciling bank accounts at least every five weeks to scrutinising unidentified transactions, make sure you perform the right steps at the right time in the right way.
It begins by understanding the SRA Accounts Rules thoroughly and introducing better processes for assured regulatory compliance. To achieve this, training of all staff, not just cashiers, is essential.
Assign roles, responsibilities and authorities
Trickier for smaller firms with fewer staff, but if you can, give cashiering duties to different people: for example, one person entering accounts data, another processing payments and another reconciling your bank accounts. On top of this, set up controls in the form of authorisation levels. System permissions are a great way to create boundaries and prevent fraud.
These best-practice methods, cross-checks and layers of approval act as a deterrent or, at the very least, let you spot anomalies before it’s too late.
Run an accounting health check
Comprehensive health checks reveal vital business intelligence and compliance insights. Many of the problems above would be identified and headed off with this type of review.
If you do not have these skills in-house, Silver Throne performs health checks day in, day out. Our thorough financial review, compliance analysis, reconciliation verification, audit preparation and easy-to-implement report will get your accounts shipshape.
Report breaches accurately and promptly
Minor compliance failures only need to be recorded in-house by your COLP or COFA, but serious breaches must always be reported to the SRA. The SRA’s Code of Conduct sets out whether a breach is reportable, and you will need to apply professional judgement too.
Strike the right balance between reporting trivial oversights unnecessarily and withholding information about serious matters. The latter will cause the SRA to come down much harder on the firm and the individuals concerned.
Carry out a best-practice study
Combining tips 1 to 4, use the expertise of external legal-specialist consultants and trainers like Silver Throne to look closely at your existing processes and recommend improvements to your day-to-day, month-end and year-end procedures.
These advisory services are not simply about which buttons to press in your legal accounting and case management software. It is a consultative approach to making the changes that let you run a first-rate accounting function that regulators will approve of.
Do you need an accountant’s report?
Firms that hold or receive client money must obtain an accountant’s report for each accounting period, within six months of the period end. You are exempt if:
- All the client money you held or received came from the Legal Aid Agency, or
- Your average client account balance was no more than £10,000 and the maximum balance was no more than £250,000
A qualified report must currently be sent to the SRA. See the 2027 changes ›
Common breaches we find
These are the issues that most often lead to a qualified accountant’s report. Each is avoidable with the right controls.
Client account used as a banking facility
Payments in or out that are not linked to a regulated legal service.
Late or incomplete reconciliations
Reconciliations not done every five weeks, not signed off, or differences left unexplained.
Residual balances
Small amounts left on closed matters instead of being returned to clients promptly.
Money not banked promptly
Client money held in office account or not paid in without delay.
Mixing office and client money
Fees transferred before a bill or written notification has been given.
Debit balances on client ledgers
Payments made for a client before funds were received, a breach that needs correcting immediately.
Our SRA compliance health check
A practical, independent review of your accounts function, with a clear action plan.
- Financial reviewClient and office ledgers, transfers and billing.
- Compliance analysisTesting against each relevant SRA Accounts Rule.
- Reconciliation verificationFive-weekly reconciliations checked and differences investigated.
- Audit preparationReady for your accountant’s report and SRA reporting.
- Actionable reportFindings ranked by risk, with clear steps to fix them.
- Training and COFA supportTraining for fee earners and cashiers, and support for your COFA.
Need an accountant’s report, a health check or outsourced cashiering? Request a proposal and we will reply with a fixed fee.
Request for Proposal ›Get your accounts shipshape
Book a health check before your next accountant’s report, or talk to us about ongoing cashiering support. Call us on 0333 880 8400.
Related services and insights
This page gives general information on the SRA Accounts Rules, not legal advice. Please refer to the current rules and take advice on your own circumstances.
