Acing the SQE/Solicitors Accounts
Solicitors Accounts[edit | edit source]
The SRA (Solicitors Regulation Authority) Accounting Rules are a set of guidelines that solicitors in England and Wales must follow in order to ensure that their financial practices comply with the regulatory standards set forth by the SRA.
The basic principle of the SRA Accounting Rules is to maintain a client's money in a separate account from the solicitor's own money. This ensures that the client's money is protected and can be returned to the client if necessary. The rules also require that accurate records are kept of all financial transactions related to the client's matter, including the amount of money received from the client, the date of receipt, the purpose for which the money is being held, and the amount paid out to the client or on their behalf.
In addition to the requirement of keeping client money separate, the SRA Accounting Rules also govern the handling of other funds, such as office money and residual balances. Office money is the money that solicitors use for their own business purposes, such as paying office rent, salaries, and other expenses. Residual balances are funds left over in a client account after a matter has been completed, and the client's money has been paid out.
Client money[edit | edit source]
definition[edit | edit source]
Under the SRA Accounting Rules, client money refers to any money that a solicitor receives and holds on behalf of a client or third party in relation to their legal matter. This can include money received as payment for legal services, money held for disbursement on the client's behalf, or money held as security for future payments.
Client money must be kept separate from a solicitor's own money and must be held in a designated client account. The client account must be clearly identified as a client account, and the bank must acknowledge that the account is being used to hold client money. The solicitor must also keep accurate records of all transactions involving client money, including the amount received, the date of receipt, and the purpose for which the money is being held.
The SRA Accounting Rules place a high level of importance on the proper handling of client money to ensure that it is protected and can be returned to the client if necessary. Any interest earned on client money must also be accounted for and treated in accordance with the rules.
requirement to pay client money into a client account[edit | edit source]
circumstances in which client money may be withheld from a client account repayment accounting entries required. Client account:
meaning and name of account obligation not to use client account to provide banking facilities withdrawals and accounting entries required. Requirement to keep client money separate from money belonging to the authorised body
requirement to pay interest on client money accounting entries required. Breach of the SRA Accounts Rules:
duty to correct breaches of SRA Accounts Rules promptly on discovery accounting entries required. Requirement to keep and maintain accurate records in client ledgers, including requirement to carry out reconciliation of client accounts and to keep a record of bills to include:
disbursements using the agency and principal methods transfers submission, reduction and payment of bills including the VAT element accounting entries required. Operation of joint account; operation of a client’s own account
Third-party managed accounts
Obtaining and delivery of accountants’ reports; storage and retention of accounting records