Understanding SRA Compliance
The SRA Accounts Rules are designed to safeguard client money and ensure law firms maintain appropriate accounting records, systems and controls. Compliance is not simply about producing year-end accounts. It requires firms to maintain accurate accounting records throughout the year, perform regular reconciliations, identify breaches promptly and ensure client money is handled in accordance with the Rules.
For many firms, the challenge is not understanding the rules. The challenge is implementing practical systems and controls that ensure compliance on a day-to-day basis. At CFA Accountants, we support solicitors, legal practices and COFAs with the financial systems, reconciliations and reporting processes required to maintain compliance and reduce risk.
Three-Way Client Account Reconciliations
One of the most important controls under the SRA Accounts Rules is the three-way reconciliation. A three-way reconciliation compares:
- ✓The client bank account balance
- ✓The client cashbook balance
- ✓The total of individual client ledger balances
All three figures should agree. Where differences exist, they must be investigated and corrected promptly. Three-way reconciliations help identify posting errors, missing transactions, incorrect transfers, unallocated receipts and client money shortages.
Failure to maintain accurate reconciliations can expose firms to regulatory breaches and increased compliance risk. The SRA Accounts Rules require firms to maintain accurate accounting records and regularly reconcile client accounts so that any discrepancies are identified and investigated promptly. Three-way client account reconciliations should be completed at least every five weeks, although many firms perform them monthly as good practice. Any differences should be investigated and resolved promptly.
Office Account vs Client Account
Many compliance issues arise because firms fail to distinguish correctly between office money and client money. Client money belongs to clients or third parties. Office money belongs to the firm. Incorrect posting or transfers between office and client accounts can result in breaches of the SRA Accounts Rules and, in some cases, client money shortages.
We help firms establish robust procedures for:
Residual client balances should be reviewed regularly and dealt with in accordance with the SRA Accounts Rules once reasonable attempts have been made to return funds to the client.
How We Support COFAs
A Compliance Officer for Finance and Administration (COFA) is responsible for taking all reasonable steps to ensure compliance with the SRA Accounts Rules and reporting material breaches where required. We provide support through:
We also support firms using LEAP by assisting with reconciliations, financial reporting, client ledger reviews and accounting processes to help maintain compliance with the SRA Accounts Rules.
Rather than simply reporting historic financial information, we work with firms throughout the year to strengthen financial controls, identify potential compliance issues early and support ongoing compliance with the SRA Accounts Rules.
Frequently Asked Questions
Accounting Services for Legal Practices
From day-to-day bookkeeping through to partner tax planning, we handle the full accounting function so your team can focus on the law.
Bookkeeping & Cloud Accounting
Management Accounts
VAT Returns
Payroll
Partner Drawings
Tax Planning
Cash Flow Forecasting
Client Money Controls
Reconciliations
Record Keeping
Internal Controls
Frequently Asked Questions
Do you understand SRA Accounts Rules?
Yes. We have specific experience working with law firms on SRA Accounts Rules compliance, including client money controls, reconciliations and record keeping requirements.
Can you handle client money reconciliations for our legal practice?
Yes. We support law firms with client account reconciliations, internal controls and the record keeping standards required under SRA regulations.
Do you work with solicitors and law firms across Manchester?
Yes. We support legal practices across Manchester, Greater Manchester and the wider North West including Salford, Trafford and Stockport.
What accounting software do you use for law firms?
We use cloud accounting systems including Xero, which integrate cleanly with legal practice management software. We set up and manage the full workflow for you.
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No hidden charges. All fees agreed upfront. Free initial consultation included.
Ready to Work With a Specialist Legal Accountant?
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