The ICAEW has published Technical Release 16/15 AAF Solicitors Regulation Authority (SRA) Accounts Rules providing interim guidance for reporting accountants
The Accounts Rules are now significantly shorter and focused on principles, rather than prescriptive rules for law firms, the ICAEW said. The detailed requirements and approach to be taken by the reporting accountant have also been taken out of the Accounts Rules and moved to SRA guidance.
TECH 10/21 AAF includes background to the Accounts Rules, the role of the reporting accountant and practical implications for reporting accountants, including suggested language for letters of engagement.
SRA sets Accounts Rules for solicitors handing client money. These aim to keep client money safe, by establishing rules, as well as principles and codes of conduct for firms and solicitors. Solicitors must have systems and controls in place to protect client money.
If you have, at any time during an accounting period, held or received client money, or operated a joint account or a client's own account as signatory, you must:
- obtain an accountant's report for that accounting period within six months of the end of the period; and
- deliver it to the SRA within six months of the end of the accounting period if the accountant's report is qualified to show a failure to comply with these rules, such that money belonging to clients or third parties is, or has been, or is likely to be placed, at risk.
You are not required to obtain an accountant's report if:
- all of the client money held or received during an accounting period is money received from the Legal Aid Agency; or
- in the accounting period, the statement or passbook balance of client money you have held or received does not exceed an average of £10,000; and a maximum of £250,000; or the equivalent in foreign currency.
All accounting records must be stored securely and retained for at least six years.
This Technical Release provides guidance for reporting accountants on how to perform these engagements. This guidance provides the know-how to help reporting accountants to scope and perform their work to meet their professional responsibilities.
The Technical Release has been developed with input from the SRA and is intended to help promote consistency in approach.