As a takeaway we have compiled the top five tips for getting the SRA rules right:
1. Ensure that your firm’s systems and controls in relation to handling client money are fully documented in the firm’s SRA Accounts Rules Manual, and that this is reviewed on an regular basis and updated as required.
2. If your firm does not already complete a three-way bank reconciliation at least once every five weeks, make sure this is implemented as soon as possible. This is one of the best ways for identifying shortfalls on the client account, and breaching this Rule is something the SRA take very seriously.
3. Consider the best way for your firm to document the COFA’s review and challenge of the register of breaches and residual balances. This can be done by adding additional sections to the bank reconciliation cover sheet, or making it a standing item on the agenda for the risk committee/ partners’ meeting.
4. The Rules and the SRA’s statement of prescribed circumstances does not give set rules on the treatment of residual balances. We recommend that you set out clear procedures for returning funds to clients at the completion of the matter, and where residual breaches do occur, the necessary steps to be taken before the funds can be paid to charity.
5. Where firms are setting internal procedures which deviate from the 2011 Rules, the firm should document why this change is appropriate, and why there is no risk of loss to the client as a result.