Butt Miller is a qualified and experienced SRA auditor
Legal and solicitor firms that manage client money usually require an annual audit to ensure SRA (Solicitors Regulation Authority ) compliance*.
At Butt Miller, we have long experience in completing accountant’s reports and acting as the reporting accountant for a number of clients all over England.
We are registered as auditors with the Institute of Chartered Accountants in England and Wales (ICAEW), with registration number C003401212.
We uphold the very highest standards and take a proactive approach to legislative changes. It is our job to stay informed and inform our clients of all appropriate alterations and variations of government policy.
Whatever changes occur in national and international policy, Butt Miller reacts quickly and effectively on behalf of our clients so you can be sure that the advice that we give is reliable, accurate and available in jargon-free formats.
Contact us today for friendly and professional advice on SRA audits.
*There are a few exceptions – please see the SRA’s website for more details.
Which firms require SRA audits?
All solicitor firms based in England and Wales who hold or receive client monies must obtain an accountant’s report within six months of the end of the accounting period to which the report relates.
This report confirms that the firm has complied with the Solicitors Regulation Authority (SRA) Accounts Rules.
What are the SRA Accounts Rules?
An SRA audit is required to ensure that the legal firms that hold client money meet legal and regulatory requirements. SRA compliance is based on the following principles and rules:
- Separate client account – Client money must be held in a dedicated client account, separate from the business account. Client money includes fee payments (before billing), property transactions, and court settlements.
- Transfers and withdrawals – Firms can only transfer money to their office account when they issue a bill or incur expenses on behalf of the client.
- Prompt banking – Any client money received must be deposited into the client’s account without delay.
- Interest on client funds – If their money is held for a significant amount of time, Clients should receive a fair amount of interest.
- Accounting records – Detailed and up-to-date financial reporting of client transactions is required.
- Monthly reconciliations – The firm must check its records against bank statements at least once a month.
- Residual balances – If a client has an unclaimed balance, the firm must make reasonable efforts to return it. If unclaimed, the firm can donate it to charity.
- Compliance and audits –The firm must undertake an annual SRA audit and receive an accountant’s report on the findings.
What is the purpose of an AR1 Accountant’s Report Form?
The purpose of the AR1 Accountant’s Report Form is to confirm that the legal firm is complying with the SRA’s accounts rules.
The form must be completed six months after the end of the reporting date, but it does not need to be sent to the SRA unless significant breaches have been identified. Any breaches that are found will be discussed with the Compliance Office for Finance and Administration (COFA), and advice will be given on how to rectify them.
If you are interested in learning more, then details can be found on the Solicitors Regulatory Authority website.
Can my current accountant sign a solicitor’s accountant report?
Your current accountant may be able to sign an SRA, providing they are registered as Chartered Certified Accountants and Auditors (ACCA) or Chartered Accountants (ICAEW) as auditors.
The SRA audit differs from a statutory audit and requires specialist skills and knowledge. The rules are regularly updated, so it is important to ensure that you receive the most up-to-date advice from a qualified professional.
Our SRA audit process
First, we will contact you to understand your accounting systems and controls, along with your firm’s compliance procedures. This will involve several meetings and questionnaires. We will then plan our audit remotely before visiting your office to carry out the necessary fieldwork.
Our SRA audit process generally takes five working days. This includes one to two days of pre-work, one to two days at your office, and one day to finalise the report. To conduct the audit, we require access to client and company bank statements, client ledgers, cashbooks, and client files.
We understand that different firms have different setups, and we will use our professional judgement to tailor our working methods to suit you. Our friendly team aim to cause minimum disruption to your business.
Why choose Butt Miller for your SRA Audits?
A successful SRA audit requires precision, expertise, and a deep understanding of regulatory requirements. At Butt Miller, our team of chartered accountants is highly experienced in this area and can deliver efficient and non-disruptive SRA audits, ensuring your firm meets its obligations with confidence.
Please contact us for a tailored, competitive quote.
Frequently asked questions about SRA audits
What is an SRA investigation?
The purpose of an SRA investigation is to establish whether a solicitor or law firm has breached SRA rules on handling client money. It involves evidence gathering, interviews, and potential disciplinary action. Regular SRA audits and strong compliance measures help firms avoid investigations and maintain regulatory trust.
How often should my firm conduct an SRA audit?
Your firm should conduct an SRA audit annually to ensure compliance with SRA Accounts Rules. Regular internal reviews throughout the year can also help identify and resolve issues before they escalate.
What happens if you breach the SRA Code of Conduct?
Most legal professionals are aware of the SRA Accounts Rules and maintain compliance. However, if an Accountant’s Report identifies significant breaches in the accounts rules and/or weaknesses in the firm’s systems and controls, which put client money at risk, the report will be ‘qualified’ and must be submitted to the SRA.
Minor technical breaches of the rules need not be reported to the SRA if they are rectified on discovery and are not considered to put client monies at risk.
How much does an SRA audit cost?
Our fees depend on the amount of client monies held at the end of the accounting period, the number of client ledgers, and the type of legal services undertaken. As a new client, we will tailor our fee to your specific requirements and circumstances.
What sort of breaches are found in an SRA audit?
Examples of breaches include:
– An amount paid into a client account which isn’t permitted
– Unauthorised withdrawals from a client account
– Overdrawn client accounts
– Use of suspense accounts
– Failure to reconcile bank accounts on a timely basis
