If you are a solicitor or a law firm and hold client money, you will mostly likely need to have your client accounts audited annually.*
This is different from a statutory accounts audit, which is only required for larger firms and practices. For an accountant to be qualified to perform this function they need to be registered as an auditor by a recognised professional body.
We at Butt Miller have experience in completing accountant’s reports and acting as the reporting accountant for a number of clients all over England. We are registered with the Institute of Chartered Accountants in England and Wales (ICAEW) and are registered as auditors under the registration number C003401212.
Hold the very highest standards and take a proactive approach to changes in legislation. It is our job to stay informed, and to inform our clients of all appropriate alterations and variations of Governmental policy.
Whatever changes occur in national and international policy, Butt Miller react 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.
What is a SRA Audit?
All solicitor firms based in England and Wales who hold or receive client monies will need to obtain an Accountant’s Report within 6 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 is the purpose of an AR1 Accountants Report Form?
The purpose of the AR1 Accountants Report Form is to confirm that the solicitor is complying with the SRA’s accounts rules.
The forms must be completed 6 months after the end of the reporting date but 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) with advice on how to rectify them.
If you are interested to know more, then details can be found on the Solicitors Regulatory Authority website.
Do solicitors have to be audited?
Solicitors and law firms based in England and Wales who hold client monies are required by the Solicitors Regulatory Authority (SRA) to have their client accounts audited by an external accountant. This will need to be performed annually.
Accounting for a solicitors and law firm is a specialist area that requires an understanding of the SRA accounts rules.
Can my current accountant sign a Solicitors Accountants 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 is different from a statutory audit, and requires specialist skills and knowledge. The rules are regularly updated and it is important to ensure that you receive the most up to date advice.
At Butt Miller we will be looking at your accounts from a different aspect from your current accountant and can provide an alternative point of view and advice.
How will Butt Miller conduct an SRA Audit?
We will initially contact you to understand your accounting systems and controls, along with your firm’s compliance procedures; this will involve conversations and questionnaires. We will then plan our audit remotely before coming to visit your office to carry out the field work.
Why choose Butt Miller for your SRA Audits?
At Butt Miller we have a team of experienced specialists to complete your audit on a timely basis with minimum disruption to you. Please contact us for a tailored, competitive quote.
*There are a few exceptions – please see the SRA’s website for more details
Check if our frequently asked questions can shed more light
What is an SRA investigation?
All law firms who hold or receive client money will need to obtain an Accountant’s Report within 6 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 and must be completed on an annual basis.
How long do SRA audits take?
We anticipate being able to complete the task during a period of 5 working days. This involves 1-2 days beforehand, 1-2 days on site and 1 day to finalise the report.
We accept that different firms have different setups and will use our professional judgement to tailor our working methods to suit you. We aim to cause minimum disruption and our friendly working team will ensure that you benefit from the review process.
As part of the review we will need to have access to bank statements, client ledgers, cashbooks and client files.
What happens if you breach SRA Code of Conduct?
If the 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.
Most legal professionals are aware of the SRA accounts rules and comply with them on an ongoing basis to ensure that their business is compliant.
How much does an SRA audit cost?
Our fees depend on the level 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 the client account which isn’t permitted
- Unauthorised withdrawals from the client account
- Overdrawn client accounts
- Use of suspense accounts
- Failure to reconcile bank accounts on a timely basis