2.6 When introducing new systems, care must be taken to ensure:

Transcription

1 Appendix 3 SRA Guidelines Accunting Prcedures and Systems 1. Intrductin 1.1 These guidelines, published under rule 26 f the SRA Accunts Rules 2011, are intended t be a benchmark r brad statement f gd practice requirements which shuld be present in an effective regime fr the prper cntrl f client mney. They shuld therefre be f psitive assistance t firms in establishing r reviewing apprpriate prcedures and systems. They d nt verride, r detract frm the need t cmply fully with, the Accunts Rules. 1.2 References t managers r firms in the guidelines are intended t include sle practitiners, recgnised bdies and licensed bdies, and the managers f thse bdies. 2. General 2.1 Cmpliance with the Accunts Rules is the equal respnsibility f all managers in a firm. This respnsibility als extends t the Cmpliance Officer fr Finance and Administratin, whether r nt a manager (see rule 6). They shuld establish plicies and systems t ensure that the firm cmplies fully with the rules, including prcedures fr verifying that the cntrls are perating effectively. Respnsibility fr day t day supervisin may be delegated t ne r mre managers t enable effective cntrl t be exercised. Delegatin f ttal respnsibility t a cashier r bk-keeper is nt acceptable. 2.2 The firm shuld hld a cpy f the current versin f the Accunts Rules and/r have ready access t the current n-line versin. The persn wh maintains the bks f accunt must have a full knwledge f the requirements f the rules and the accunting requirements f firms. 2.3 Prper bks f accunt shuld be maintained n the duble-entry principle. They shuld be legible, up t date and cntain narratives with the entries which identify and/r prvide adequate infrmatin abut the transactin. Entries shuld be made in chrnlgical rder and the current balance shuld be shwn n client ledger accunts, r be readily ascertainable, in accrdance with rule Ledger accunts fr clients, ther persns r trusts shuld include the name f the client r ther persn r trust and cntain a heading which prvides a descriptin f the matter r transactin. 2.5 Manual systems fr recrding client mney are capable f cmplying with these guidelines. A cmputer system, with suitable supprt prcedures will, hwever, prvide an efficient means f prducing the accunts and assciated cntrl infrmatin. 2.6 When intrducing new systems, care must be taken t ensure: (1) that balances transferred frm the bks f accunt f the ld system are recnciled with the pening balances held n the new system befre day t day peratin cmmences; (2) that the new system perates crrectly befre the ld system is abandned. This may require a perid f parallel running f the ld and new systems and

2 the satisfactry recnciliatin f the tw sets f recrds befre the ld system ceases. 2.7 The firm shuld ensure that ffice accunt entries in relatin t each client r trust matter are maintained up t date as well as the client accunt entries. Credit balances n ffice accunt in respect f client r trust matters shuld be fully investigated. 2.8 The firm shuld establish plicies and perate systems fr the payment f fair and reasnable interest t clients in accrdance with rules 22 and Receipt f client mney 3.1 The firm shuld have prcedures fr identifying client mney, including cash, when received in the firm, and fr prmptly recrding the receipt f the mney either in the bks f accunt r a register fr later psting t the client cash bk and ledger accunts. The prcedures shuld cver mney received thrugh the pst, electrnically r direct by fee earners r ther persnnel. They shuld als cver the safekeeping f mney prir t payment t bank. 3.2 The firm shuld have a system which ensures that client mney is paid prmptly int a client accunt. 3.3 The firm shuld have a system fr identifying mney which shuld nt be in a client accunt and fr transferring it withut delay. 3.4 The firm shuld determine a plicy and perate a system fr dealing with mney which is a mixture f ffice mney and client mney, r client mney and ut-fscpe mney, r client mney, ut-f-scpe mney and ffice mney, in cmpliance with rules Payments frm client accunt 4.1 The firm shuld have clear prcedures fr ensuring that all withdrawals frm client accunts are prperly authrised. In particular, suitable persns shuld be named fr the fllwing purpses: (1) authrisatin f internal payment vuchers; (2) signing client accunt cheques; (3) authrising telegraphic r electrnic transfers. N ther persnnel shuld be allwed t authrise r sign the dcuments. 4.2 The firm shuld establish clear prcedures and systems fr ensuring that persns permitted t authrise the withdrawal f client mney frm a client accunt have an apprpriate understanding f the requirements f the rules, including rules 20 and 21 which set ut when and hw a withdrawal frm client accunt may prperly be made. 4.3 Persns nminated fr the purpse f authrising internal payment vuchers shuld, fr each payment, ensure there is supprting evidence shwing clearly the reasn fr the payment, and the date f it. Similarly, persns signing cheques and authrising

3 transfers shuld ensure there is a suitable vucher r ther supprting evidence t supprt the payment. 4.4 The firm shuld have clear systems and prcedures fr authrising withdrawals frm client accunts by electrnic means, with apprpriate safeguards and cntrls t ensure that all such withdrawals are prperly authrised. 4.5 The firm shuld have a system fr checking the balances n client ledger accunts t ensure n debit balances ccur. Where payments are t be made ther than ut f cleared funds, clear plicies and prcedures must be in place t ensure that adequate risk assessment is applied. N.B. If incming payments are ultimately dishnured, a debit balance will arise, in breach f the rules, and full replacement f the shrtfall will be required under rule 7. See als rule 20, guidance ntes (iii)(a) and (iv)(a). 4.6 The firm shuld establish systems fr the transfer f csts frm client accunt t ffice accunt in accrdance with rule 17.2 and Nrmally transfers shuld be made nly n the basis f rendering a bill r written ntificatin. The payment frm the client accunt shuld be by way f a cheque r transfer in favur f the firm r sle principal see rule The firm shuld establish plicies and perate systems t cntrl and recrd accurately any transfers between clients f the firm. Where these arise as a result f lans between clients, the written authrity f bth the lender and brrwer must be btained in accrdance with rule The firm shuld establish plicies and perate systems fr the timely clsure f files, and the prmpt accunting fr surplus balances in accrdance with rule The firm shuld establish systems in accrdance with rule 14.4 t keep clients (r ther peple n whse behalf mney is held) regularly infrmed when funds are retained fr a specified reasn at the end f a matter r the substantial cnclusin f a matter. 5. Overall cntrl f client accunts 5.1 The firm shuld maintain cntrl f all its bank and building sciety accunts pened fr the purpse f hlding client mney. In the case f a jint accunt, a suitable degree f cntrl shuld be exercised. 5.2 Central recrds r central registers must be kept in respect f: (1) accunts held fr client mney, which are nt client accunts (rules 15.1(a), 16.1(d) and 29.19); (2) practice as a liquidatr, trustee in bankruptcy, Curt f Prtectin deputy r trustee f an ccupatinal pensin scheme (rules 8 and 29.20);

4 (3) jint accunts (rules 9 and 29.21); (4) dividend payments received by an executr, trustee r nminee cmpany as nminee (rules 28.2 and 29.23); and (5) clients' wn accunts (rules 10, 15.1(b) and 30.3). 5.3 In additin, there shuld be a master list f all: general client accunts; separate designated client accunts; accunts held in respect f 5.2 abve; and ffice accunts. The master list shuld shw the current status f each accunt; e.g. currently in peratin r clsed with date f clsure. 5.4 The firm shuld perate a system t ensure that accurate recnciliatins f the client accunts are carried ut at least every five weeks. In particular it shuld ensure that: (1) a full list f client ledger balances is prduced. Any debit balances shuld be listed, fully investigated and rectified immediately. The ttal f any debit balances cannt be "netted ff" against the ttal f credit balances; (2) a full list f unpresented cheques is prduced; (3) a list f utstanding ldgements is prduced; (4) frmal statements are prduced recnciling the client accunt cash bk balances, aggregate client ledger balances and the client bank accunts. All unreslved differences must be investigated and, where apprpriate, crrective actin taken; (5) a manager r the Cmpliance Officer fr Finance and Administratin checks the recnciliatin statement and any crrective actin, and ensures that enquiries are made int any unusual r apparently unsatisfactry items r still unreslved matters. 5.5 The firm shuld have clear plicies, systems and prcedures t cntrl access t cmputerised client accunts by determining the persnnel wh shuld have "write t" and "read nly" access. Passwrds shuld be held cnfidentially by designated persnnel and changed regularly t maintain security. Access t the system shuld nt unreasnably be restricted t a single persn nr shuld mre peple than necessary be given access. 5.6 The firm shuld establish plicies and systems fr the retentin f the accunting recrds t ensure: bks f accunt, recnciliatins, bills, bank statements and passbks are kept fr at least six years; paid cheques, digital images f paid cheques and ther authrities fr the withdrawal f mney frm a client accunt are kept fr at least tw years;

5 ther vuchers and internal expenditure authrisatin dcuments relating directly t entries in the client accunt bks are kept fr at least tw years. 5.7 The firm shuld ensure that unused client accunt cheques are stred securely t prevent unauthrised access. Blank cheques shuld nt be pre-signed. Any cancelled cheques shuld be retained.