The Accountant's Report is written after the year has closed. Everything it reports on happened during it. This is the year-round work that decides whether your report is clean: ledgers, the five-weekly three-way reconciliation, transfers evidenced against bills, and breaches caught while they are still small.
Client account bookkeeping goes wrong in a recognisable way. The cashier leaves, or goes on maternity leave, or the fee earners get busy and a completion week swallows the month. The reconciliation slips past five weeks. A difference appears and gets carried forward because there is no time to chase it. None of that is dishonest and none of it is unusual — but every one of those is a finding a reporting accountant is trained to look for, and Rule 8.3 is not written in a way that forgives a busy month.
We do the client-side bookkeeping as a service, or alongside your cashier, to the standard the rules actually specify. The rules are not vague. They name the records, the frequency and the person who signs off, and it is worth setting them out plainly because most summaries of them are softer than the text.
The rules we work to
Accurate, contemporaneous and chronological records. Client ledgers identified by client name and a description of the matter, with client money and business money recorded on separate sides. A list of all client ledger balances carrying a running total. And a cash book, also with a running total. Those three are the raw material of the reconciliation, and if any of them is being reconstructed at year end rather than kept as it goes, the word "contemporaneous" has already failed.
Bank or building society statements obtained at least every five weeks for all client and business accounts. The office account is inside the Accounts Rules perimeter here, which surprises firms who assume the rules stop at the client account.
At least every five weeks, for all client accounts held or operated, a reconciliation of the bank or building society statement balance with the cash book balance and the client ledger total. Three figures. A two-way reconciliation — bank against cash book — is not compliant, and it is not a technicality: bank against cash book proves your bank postings, and says nothing at all about whether the money you hold equals the sum of what you owe each client. The record must be signed off by the COFA or a manager of the firm, and differences promptly investigated and resolved.
A central record of all bills and other written notifications of costs, kept readily accessible. This is the record that proves rule 4.3 was complied with, and it is the one most likely to be scattered across a case management system, a billing spreadsheet and somebody's sent items.
Accounting records stored securely and retained for at least six years. That covers archived matters, closed ledgers and the reconciliations themselves.
The rules that get broken
The breaches register, stated accurately. There is no numbered Accounts Rule requiring one — the 2011 rules had one, the rules in force from 25 November 2019 do not. The expectation comes from paragraph 2.2 of the SRA Code of Conduct for Firms, which requires records demonstrating compliance with your regulatory obligations, plus the SRA's guidance on the responsibilities of COLPs and COFAs, which says it expects compliance officers to keep a record of all breaches without prescribing a method. Anyone citing a rule number for it is working from the old rules — and that is usually a sign about the rest of their advice.
Client ledgers by client and matter description, client and business sides kept apart, the balance list and the cash book both carrying running totals — written up contemporaneously, not rebuilt in month eleven.
Bank statement against cash book against client ledger total, inside five weeks, with the record put in front of your COFA or a manager to sign. Differences chased the same week, not carried forward.
How the tie worksEvery client-to-office transfer matched to a bill or written notification of costs for the specific sum, and the rule 8.4 central record of bills maintained in one accessible place.
A breach record your COFA can put in front of anybody, with what happened, when it was found, what was replaced and when — kept as the Code para 2.2 expectation, correctly described.
Old balances identified, tracing steps recorded, and the position on each one known — rather than a schedule of small amounts nobody has looked at since the matter closed.
Holiday, illness, resignation or a completion-heavy month. The reconciliation still happens inside five weeks, which is the point at which most firms' compliance quietly depends on one person.
Support for your COFAThis is the work the Accountant's Report reports on, and it is where the rule 12.2 exemption is won or lost, because the average and maximum client money balances come straight off your reconciliations. It is also the evidence base your COFA relies on to answer the only question that really matters: can you demonstrate compliance, today, without a fortnight's notice.
If you want to know where you stand before speaking to anyone, the client account health check walks through the obligations and returns a red, amber or green picture with what to fix first. The Accounts Rules guide covers the rest of the rulebook in plain English, and law firm owners is where the wider service sits.
Rule 8.1 requires accurate, contemporaneous and chronological records. In practice that is three things. Client ledgers identified by client name and by a description of the matter, with client money and business money recorded on separate sides. A list of all client ledger balances carrying a running total. And a cash book, also with a running total. Rule 8.4 adds a central record of all bills and other written notifications of costs, kept readily accessible. Rule 13 requires accounting records to be stored securely and retained for at least six years. Records that exist but cannot be produced quickly tend to be treated as records that do not exist.
At least every five weeks, under rule 8.3, for all client accounts held or operated. Five weeks is not the same as monthly, and the difference matters when a month end lands awkwardly or somebody is on leave. Rule 8.2 separately requires you to obtain bank or building society statements at least every five weeks for all client and business accounts — the office account is inside that requirement too. Most firms run to a monthly rhythm with a hard internal deadline a week or so after the month end, which keeps them inside five weeks even when a reconciliation slips.
Because rule 8.3 names three figures, not two. The reconciliation must compare the bank or building society statement balance with the cash book balance and with the client ledger total. Bank against cash book proves only that you have written up the bank correctly. It says nothing about whether the money you hold matches the sum of what you owe each individual client, which is the question the rule exists to answer. A shortfall or a misposted receipt can sit inside a perfectly reconciled bank account indefinitely. The record must also be signed off by the COFA or a manager, and differences investigated and resolved promptly.
Yes, but only in the order rule 4.3 sets out. You must first give the client a bill or other written notification of the costs incurred. The transfer must then be for the specific sum identified in that bill, and it must be covered by the amount held for that particular client on that particular matter. Rule 5.3 reinforces the second half: you may only withdraw if sufficient funds are held for that specific client or third party, so borrowing from one client's balance to settle another's bill is never permitted. A round-sum transfer on account of costs, made before any bill has gone out, breaches rule 4.3 however genuinely the work was done — and rule 4.3 is the single most commonly breached rule in practice.
You are expected to, but not by a numbered Accounts Rule. The 2011 rules contained one; the rules in force from 25 November 2019 do not. The obligation is built from paragraph 2.2 of the SRA Code of Conduct for Firms, which requires you to keep records demonstrating compliance with your regulatory obligations, together with the SRA's guidance on the responsibilities of COLPs and COFAs, which says it expects compliance officers to keep a record of all breaches while not prescribing a method. Rule 6.1 is the related duty: correct breaches promptly on discovery, and immediately replace money improperly withheld or withdrawn.
A free review of your ledgers, your last three reconciliations and your transfer evidence. We will tell you plainly what a reporting accountant would pick up, and what to fix first.
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