Solicitors Regulation Authority (SRA) Audits & Reports
SRA Audit Service
SRA audits are essential to ensure solicitors are following the financial and legal rules. SRA audits are guided by the Solicitors Regulation Authority and focus on the management of client monies as per the SRA Accounts Rules.
Does you law firm need an audit?
The SRA requires all solicitors and law firms in England and Wales to undergo an annual audit of their client accounts. This audit is distinct from a statutory accounts audit and focuses entirely on compliance with the SRA Accounts Rules.
Our external accountants, registered with professional bodies such as the ICAEW, will conduct a comprehensive review of your firm’s client accounts, ledgers, and files. We also evaluate your internal systems and controls to ensure compliance with the rules and prevent potential breaches. By working with us, your firm can demonstrate a strong commitment to financial integrity and transparency.
How It Works
Step one
Consultation & Financial Audit
We start with a thorough review of your current financial systems to identify areas for improvement and ensure compliance.
Step two
Customised Financial Strategy
We develop a tailored financial plan based on our findings and implement best-in-class systems to meet statutory requirements.
Step three
Ongoing Financial Management and Support
Enjoy continuous support and regular communication to stay on top of your financial health and audit readiness.
What You Get
Detailed financial audit report
Customised financial strategy document
Monthly management accounts and reports
Quarterly system review and update reports
Annual financial performance review and strategic planning session
Assurance of compliance with statutory audit requirements
Tailored Pricing to Meet Your Needs
We understand that every business has unique financial requirements. Our pricing is tailored based on the specific services you need to achieve audit readiness and financial clarity. Contact us to discuss a customised pricing plan that fits your business.
Want to learn more?
Get in touch with our in house expert Chris Morey to see how we can help.
Solicitors Regulation Authority (SRA) Audits
What are SRA Audits
SRA audits are essential to ensure solicitors are following the financial and legal rules. SRA audits are guided by the Solicitors Regulation Authority and focus on the management of client monies as per the SRA Accounts Rules.
Purpose of SRA Audits
The purpose of SRA audits is to protect client monies held by solicitors. SRA audits ensure compliance with the Solicitors Accounts Rules which govern the handling and recording of client monies. By having regular audits, firms show financial transparency and integrity in their transactions and build trust with their clients.
Solicitors’ firms must submit accountant’s reports to the SRA. This submission confirms compliance with the rules and prevents financial misbehaviour. The accountant’s report must be submitted within 6 months of the accounting period end. If the report is qualified and shows compliance failures with client money it must be submitted to the SRA immediately. Conveyancing firms who deal with large sums during property transactions particularly benefit from the audit compliance.
How We Can Help with SRA Audit Requirements
The SRA requires all solicitors and law firms in England and Wales to undergo an annual audit of their client accounts. This audit is distinct from a statutory accounts audit and focuses entirely on compliance with the SRA Accounts Rules.
Our external accountants, registered with professional bodies such as the ICAEW, will conduct a comprehensive review of your firm’s client accounts, ledgers, and files. We also evaluate your internal systems and controls to ensure compliance with the rules and prevent potential breaches. By working with us, your firm can demonstrate a strong commitment to financial integrity and transparency.
The Solicitors Regulation Authority
The SRA is responsible for the regulation and supervision of solicitors in England and Wales. It ensures that legal practices maintain high standards and protect the client’s interests. The Authority sets and enforces the rules for the ethical and financial conduct of firms.
The SRA not only requires audits but also provides a framework for solicitors to understand and comply with the rules. Through this oversight the SRA aims to have a fair and transparent legal sector. The regulatory framework is key to your firm’s operation and dictates how you must handle client monies and professional activities.
SRA Accounting Rules Principles
The SRA Accounts Rules are part of the audit process and provide a set of rules on client money. These rules state that firms must keep accurate records and separate client monies from business monies to be transparent and accountable.
Audits are part of the reporting requirements under these rules and you must submit an annual accountants report. The accountants report in relation to the Solicitors Regulatory Authority (SRA) rules must be submitted by the due date and confirms compliance with the accounting rules. It is essential the report is signed by a qualified accountant who is SRA experienced. Timely submission of the accountants report is particularly important in cases of material breaches as it prevents discrepancies that could lead to penalties or loss of trust.
SRA Audit Requirements
The Solicitors Regulation Authority (SRA) requires solicitors and law firms in England and Wales to have an annual audit of their client accounts. This SRA audit is separate from a statutory accounts audit and focuses on compliance with the Solicitors Accounts Rules. The purpose is to ensure client monies are handled in accordance with these rules.
An SRA audit is conducted by an external accountant who is registered with a professional body such as the Institute of Chartered Accountants in England and Wales (ICAEW). The audit involves a full review of the firm’s client accounts including the client bank account, client ledgers and client files. The audit also looks at the firm’s systems and controls including accounting records, internal controls and compliance procedures.
By complying with the SRA audit requirements law firms show they are committed to high standards of financial integrity and transparency. This protects client monies and the firm’s reputation for being reliable and ethical. Compliance with the SRA rules is key to maintaining client and regulatory trust.
Preparing for SRA Audits: Our Approach
We’re here to guide you through the SRA audit process, ensuring your firm is well-prepared and compliant. Our focus is on three core areas: compliance, systems and controls, and client money management.
Compliance
We’ll review your current practices against the SRA Accounts Rules to ensure everything is in line. We recommend regular internal reviews and training for your team to ensure ongoing compliance.
Systems and Controls
Strong systems and controls are essential for a successful audit. We’ll help you implement and maintain a framework that tracks financial transactions accurately, and we’ll work with your team to assign clear roles and responsibilities to reduce errors and enhance governance.
Client Money Management
Client money management is one of the most scrutinised aspects of an SRA audit. We ensure that your procedures for handling withdrawals, deposits, and reconciliations comply fully with the rules. Our team will also train your staff on best practices and ensure your records are audit-ready.
Client Money Audits: Protecting Your Firm
Client money audits are an essential part of ensuring compliance with the SRA Accounts Rules. These audits are specific to firms that hold client monies, and they involve a detailed review of client accounts, ledgers, and files.
We offer comprehensive client money audits, providing not just the audit itself but also practical recommendations for improving your processes. By staying on top of these audits, your firm can protect client assets and maintain the high level of trust required in the legal profession.
Audit Process and Accountant’s Reports
In the audit for solicitors the reporting accountant has specific responsibilities to ensure the financial records are accurate and compliant. This will involve reviewing accounting periods and submitting reports in accordance with the SRA Accounts Rules.
Reporting Accountant
The reporting accountant has a key role in the audit for solicitors. As an accountant and reporter they will review the management of client money in the solicitor’s accounts. Their responsibilities will include checking the firm’s financial practices are compliant with the SRA Accounts Rules.
In addition to checking compliance the accountant will identify and report any discrepancies or breaches of handling client monies. They will ensure firms are transparent and honest in their financial dealings.
Accounting Periods
Accounting periods are reviewed in detail to ensure all financial activities comply with the regulations. Each period will show client money transactions and the firm’s financial position. This will allow the accountant to see patterns, anomalies and compliance issues.
You must look at the whole accounting period to get a full picture of the firm’s financial position. This will help identify risks and allow for correction where necessary.
Accountant’s Reports Submission Criteria
Submission of accountant’s reports is a requirement governed by the SRA Accounts Rules. These reports must be full, accurate and submitted on time to comply.
The reporting accountant will prepare and review these reports to ensure all the information is true and fair. The AR1 form will accompany these reports to give further information on the financial position and to show compliance with the regulations. Proper and timely submission will avoid penalties and maintain the firm’s reputation.
Audit Findings and SRA Compliance
Audits for solicitors are about compliance with SRA Accounts Rules, identifying breaches and assessing the severity. A qualified report can impact the firm’s operations.
Breaches
In audits identifying breaches means reviewing whether the firm is complying with the SRA Accounts Rules. Breaches can be in money handling, record keeping or ethical standards. The process will involve a detailed review of client accounts, transactions and documentation.
When breaches are found they will be reported and can lead to corrective action or penalties. The importance of identifying breaches is to maintain the integrity of the financial operations and legal obligations. Proactive identification will reduce the risk and maintain client trust.
Major vs. Minor Breaches
Not all breaches are equal. Major breaches are serious issues such as large scale mis-handling of client money or intentional rule breaking. These can have serious regulatory consequences including fines and reputational damage.
Minor breaches are less severe but still need to be addressed. These might be clerical errors or non compliance that doesn’t harm clients directly. Addressing minor breaches early will prevent them from escalating into major issues. Professional judgement will be needed to determine the breach category and the action to take.
Qualified Reports
A qualified report is issued when the auditor finds the firm is not fully compliant with the SRA standards. A qualified report can damage the firm’s reputation and operational ability. A qualified report will attract SRA scrutiny and could lead to enforcement action.
The consequences of a qualified report will impact client perception and the firm’s regulatory status. Trust and credibility will be lost and future business will be affected. Firms must address the issues that led to the qualified report quickly and use them as an opportunity to improve processes and be fully compliant going forward.
The Regulatory Environment for Solicitors
In the UK solicitors operate in a highly regulated environment to protect client interests and professional standards. The SRA, SRA Accounts Rules and chartered accountancy bodies are key players in this environment.
SRA Regulations and Legal Services
The SRA is the main regulator for solicitors and law firms in England and Wales. It ensures legal professionals are practicing to high standards. These regulations set out the requirements for competent and ethical legal services.
SRA Standards and Regulations from November 2019 are about transparency, integrity and accountability. Solicitors must comply with these requirements to maintain their practice and protect the solicitor and client interests.
Solicitors Accounts Rules
The Solicitors Accounts Rules are key to the financial integrity of law firms. These rules require strict procedures for handling client money so that money is kept separate from the firm’s own funds. This will protect client assets and increase confidence in the legal services.
Firms must keep accurate records and submit annual accountants’ reports to the SRA. This will help detect and prevent misuse of client funds and reduce risk for both solicitors and clients.
Role of Chartered Accountancy Bodies
Chartered accountancy bodies like ICAEW provide guidance and support to solicitors and their accountants. These bodies will provide insight into the Solicitors Accounts Rules and other regulatory requirements.
Accountants play a key role in the audit process and often prepare and submit the reports to the SRA. Their expertise will ensure the firm is operating within the financial and ethical boundaries and reduce the risk of non compliance. Accountancy bodies are the bridge between solicitors and the regulatory bodies and will foster a culture of accountability and compliance.
The Audit Handbook: unravelling the what, why and how of audited accounts
September 19, 2023
Let’s take a step back and take a look at the what, why and how of audited accounts in your complete guide to audits.
Auditing Hub
Why should you have an audit?
Why are audits Important?
Can an audit really add value?
Do you require an Innovate UK Independent Accountants Report?
Audit Case Studies & Testimonials
Here Care Unbound Audit
John O’dwyer – Franchise Audit
Mcdonalds Brighton Audit
Audit Guides
Does my business have to be audited?
Can audit fees be paid in advance?
Audit of Less Complex Entities – what does this mean for auditors?
Case Study: Cold Coffee Inc – using analytical procedures to assess risks
Does my subsidiary require an audit?
Have you received a grant that requires an audit?
Transform Your Audit Process: Benefits of Using Caseware Audit
Navigating Energy and Carbon Reporting: An Audit Focus Perspective
What is assurance and what are the benefits?
See how we can help you...
We believe in being involved with the local business community and that is why we network extensively, host regular business seminars, write blogs and have many trusted, professional contacts