End of the annual accountant’s report is nigh


Accountant’s report: historic information, says SRA

The Solicitors Regulation Authority (SRA) has unveiled plans to remove the requirement that firms have their client accounts reviewed by an independent accountant and submit an annual accountant’s report.

Instead, the compliance officer for finance and administration (COFA) will be given the power to certify – at practising certificate renewal stage – that they are satisfied the firm is managing its client in accordance with the SRA Account Rules.

In a consultation published yesterday, the SRA said: “It is our view that the cost to firms of engaging a reporting accountant, followed by the cost to the SRA in processing all annual accounts, can no longer be justified by the risks identified through this exercise.

“These policy proposals will reduce the unnecessary regulatory burden of a compulsory report and will give firms the flexibility to decide the best methods to satisfy themselves that the SRA requirements of good financial management and protection of client money are met.

“In turn, the changes will enable the SRA to release resources and focus them on targeted regulation where we have concerns over a firm’s management of client money. This will include the SRA imposing a requirement for an accountant’s report where necessary either on an annual basis or as part of supervisory, investigative, or enforcement activity.”

It estimated that among the 9,000 firms holding client money, small firms might have to pay £800 for an accountant’s report and larger firms “several thousand”.

More than half every year are qualified, usually for minor breaches, with just 200 referred for further examination. Of these, usually only about 10 result in a fuller investigation.

Storage alone of the last six years’ of reports and destroying them securely cost the SRA as much as £200,000 a year.

The SRA said a further problem is that the reports are historic in nature, and while reporting accountants are required “immediately” to report evidence of fraud or theft or other material issues, there is a potential duplication with the duties of compliance officers.

The SRA admitted the account rules “may not satisfactorily or optimally… manage risks appropriately” and said they would be reviewed.

The reporting reform, which would represent a significant enhancement of the COFA role, was said to be “appropriate and proportionate” to the risk presented to clients’ money. The current requirement to submit annual reports “is neither sufficiently targeted nor proportionate”.

Tags:




Leave a Comment

By clicking Submit you consent to Legal Futures storing your personal data and confirm you have read our Privacy Policy and section 5 of our Terms & Conditions which deals with user-generated content. All comments will be moderated before posting.

Required fields are marked *
Email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Blog


The enduring value of ‘old skool’ tech in the age of AI

As we adopt AI, it’s crucial not to overlook the enduring value of established technologies that deliver proven benefits within an understood cost and effort window.


The enterprising solicitor – the perfect fit for a new-model law firm

Working as a legal consultant has excellent potential rewards for the right individual, offering freedom, autonomy, and a more satisfying work-life balance.


AI is not going to take over lawyers’ jobs – yet

The end is nigh. Robotic lawyers are coming for your jobs. Machines in snazzy suits will soon be swaggering into courtrooms, offering legal advice with the efficiency of a microwave and the charm of a teaspoon.


Loading animation
loading