Most people did not take the role because they wanted it, and the job description was never entirely clear. Here is what the rules actually require, in the order you need it — and the parts firms most often get slightly wrong.
Your obligations are in paragraph 9.2 of the SRA Code of Conduct for Firms, in the version in force from 11 April 2025. It requires you to take all reasonable steps to:
Three things follow, and each one is a place firms go wrong.
"All reasonable steps", not a guarantee. You are not underwriting the firm's compliance personally. You are judged on the system you put around the client account: whether the records exist, whether the reconciliation is done and reviewed, whether people know to tell you, and whether you acted when they did. A COFA with a documented system and a breach is in a very different position from a COFA with neither.
"Serious breach", not "material breach". The material and non-material distinction belonged to the 2011 rules. The Standards and Regulations that took effect on 25 November 2019 replaced it, and the SRA's reporting and notification guidance uses serious breach exclusively. If your firm's compliance manual still says material, it was drafted from pre-2019 material and the rest of it deserves a look too.
"Promptly" means promptly. There is no seven-day, fourteen-day or twenty-eight-day deadline in the rules, and any source that gives you one is wrong. The SRA's stated concern is that delay is likely to impede an effective investigation. Note too that the trigger is facts or matters you reasonably believe are capable of amounting to a serious breach — you do not have to have concluded that one occurred.
Paragraph 9.1 gives the COLP the mirror-image duty for everything except Accounts Rules matters, which are expressly carved out and left with you. That carve-out is the reason a COFA cannot quietly assume the COLP is covering the client account.
Say this one precisely
There is no rule in the SRA Accounts Rules requiring a breaches register. The 2011 rules had one. The rules in force from 25 November 2019 do not. The obligation is assembled from two other places:
So keep the register. A reporting accountant will ask for it, and its absence will show. But when somebody in the firm asks which rule requires it, the honest answer is that no numbered Accounts Rule does — and that matters, because the register's real job is to be the evidence that you have the system paragraph 9.2 requires. Understanding it that way changes what you put on it. A register that records only the breaches somebody thought were serious enough to write down is worth very little as evidence. A register that records everything, including the transfer reversed the same afternoon, is worth a great deal.
For each entry: what happened, when it was discovered, the amount, which rule is engaged, how and when it was corrected, what changed so it does not recur, and whether it was reported. Rule 6.1 requires you to correct breaches promptly upon discovery, and any money improperly withheld or withdrawn from a client account must be immediately paid in or replaced. The register is where you evidence that you did.
The core control
Rule 8.3 requires you to complete, at least every five weeks and for all client accounts held or operated by the firm, a reconciliation of the bank or building society statement balance with the cash book balance and the client ledger total. Three figures. All agreed to each other. The record must be signed off by the COFA or a manager of the firm, and differences must be investigated and resolved promptly.
A two-way reconciliation — bank to cash book, and stop — is not compliant, and it is the omission that hides the most, because the client ledger total is the leg that proves each individual client's money is actually there. Bank and cash book can agree perfectly while a client ledger sits overdrawn.
The supporting records sit around it: Rule 8.1 requires accurate, contemporaneous and chronological records — client ledgers by client name and matter description with the client side and business side kept separate, a list of all client ledger balances with a running total, and a cash book with a running total. Rule 8.2 requires statements at least every five weeks for all client and business accounts. Rule 8.4 requires a readily accessible central record of all bills and other written notifications of costs. Rule 13 requires everything to be stored securely for at least six years.
That central record of bills exists for a reason. Rule 4.3 requires a bill or other written notification of costs to be given before client money is transferred to pay your costs, for the specific sum in the bill, covered by what is held for that client. Tying transfers back to bills is how you demonstrate it, and it is the exercise a reporting accountant will run. Rule 5.3 adds that you may only withdraw where sufficient funds are held for that specific client, and Rule 3.3 that a client account must not be used to provide banking facilities. Our reconciliation guide works through the mechanics, and the COFA guide covers the role end to end.
The pile in the corner
Rule 2.5 requires client money to be returned promptly to the client or third party as soon as there is no longer any proper reason to hold it. Residual balances are what happens when that does not occur, and every firm that has been trading for a decade has some.
The prescribed circumstances in Rule 5.1(c) allow a residual balance of £500 or less on any one client matter to be paid to a charity of the firm's choice without the SRA's authorisation, provided the conditions are met. Above £500 on a matter you need the SRA's prior written authority, applied for on the SRA's form. The £500 is per client matter — not per client, and not per payment run.
The conditions are where firms come unstuck:
And the point people forget: if the charity does not give an indemnity, the firm remains liable to pay the client if they later come forward. Paying a balance away does not extinguish the claim.
Eligibility
Rule 8.2 of the SRA Authorisation of Firms Rules requires the COFA to be a manager or employee of the body, to consent to the designation, not to be disqualified under section 99 of the Legal Services Act 2007, and not to be an RSL. Only the COLP additionally has to be authorised to carry on reserved legal activities by an approved regulator. Nothing requires a COFA to hold an accountancy qualification, and many effective COFAs are practice managers or finance managers rather than solicitors.
What the role does require is the ability to take all reasonable steps — which, translated, means having competent people doing the client account work and reporting to you in a form you can act on without re-performing it yourself. That is exactly what paragraph 9.2 is asking for: a system around the client account, not a COFA who does the bookkeeping personally.
On 2 June 2026 the SRA announced that it has submitted a package of client money rule changes to the Legal Services Board. Subject to LSB approval, the SRA expects the new rules in force by early 2027. They are not in force now. Several parts of the package land directly on the COFA:
If you are the COFA at a firm above those thresholds and you also sit on the management side, that last change is worth raising with your partners now. Owners have to decide it; you will have to live with it.
You keep the role and the judgement. We do the work that makes the sign-off meaningful.
Prepared three-way, with differences investigated and a clean pack for your sign-off — not a spreadsheet you have to check line by line.
Client account bookkeepingClient ledgers, the balance listing with a running total, the cash book and the central record of bills, kept to the standard rule 8 describes.
The Accounts Rules, explainedKeeping the register usable, quantifying what happened, and clearing residual balances through the rule 5.1(c) conditions properly.
The COFA guideTwelve questions across the Accounts Rules obligations, a red, amber or green result and what to fix first. Free, no sign-up, five minutes.
Run the health checkGetting the year straight before the reporting accountant arrives, so findings are dealt with in advance rather than written up.
SRA Accountant's ReportXero alongside a case management system, set up so client money sits where the rules require and the reconciliation is not rebuilt by hand.
Xero for law firmsClient account bookkeeping and the five-weekly three-way reconciliation. The firm's annual accounts, the partnership or corporation tax return, partner tax reserves and drawings, payroll, VAT and the management figures you run the firm on. All the preparation that decides whether the report is clean.
Buzz Accounting Ltd is licensed by the AAT and a member of the ICPA. It is not a chartered accountancy firm and not a registered auditor.
Colin Ellis, ICAEW and a Responsible Individual, prepares and signs the SRA Accountant's Report itself. Rule 12.5 of the SRA Accounts Rules requires a member of ICAEW, ICAS, ACCA or ICAI who is, or works for, a registered auditor — and only that person can sign it.
Anstey Bond LLP is a separate firm, registered for audit by the ICAEW. Companies House OC360626.
Paragraph 9.2 of the SRA Code of Conduct for Firms, in force from 11 April 2025, requires you to take all reasonable steps to ensure that your firm and its managers and employees comply with any obligations imposed on them under the SRA Accounts Rules; to ensure that a prompt report is made to the SRA of any facts or matters you reasonably believe are capable of amounting to a serious breach of those rules; and to ensure the SRA is informed promptly of any facts or matters you reasonably believe should be brought to its attention so it can investigate whether a serious breach has occurred. Note the wording: all reasonable steps, not a guarantee. You are judged on the system you put around the client account.
No, and it is worth knowing precisely why. The 2011 rules required one; the SRA Accounts Rules in force from 25 November 2019 contain no such rule. The obligation is built from two other places: paragraph 2.2 of the Code of Conduct for Firms, which requires you to keep and maintain records to demonstrate compliance with your obligations under the SRA's regulatory arrangements, and the SRA's guidance on the responsibilities of COLPs and COFAs, published 25 November 2019, which says the SRA expects compliance officers to keep a record of all breaches and does not prescribe a method. Keep the register. Just do not let anyone cite a rule number for it, because there is not one.
Promptly. That is the word the rules use and there is no numbered deadline anywhere in them. There is no seven-day rule, no fourteen-day rule and no twenty-eight-day rule, and any source that offers you one is working from something other than the current rules. The SRA's position is that delay is likely to impede an effective investigation, which is the standard you should read promptly against. The other half of the test matters just as much: you report facts or matters you reasonably believe are capable of amounting to a serious breach. You are not required to have concluded that a breach occurred before you pick up the phone.
No. Rule 8.3 requires a three-way reconciliation at least every five weeks for all client accounts you hold or operate: the bank or building society statement balance, the cash book balance and the client ledger total, all agreed to each other. A reconciliation that ties the bank to the cash book and stops there is non-compliant, and the leg it leaves out is the one that matters. The client ledger total catches what the other two cannot, because it is the only one of the three that proves each individual client's money is actually there — bank and cash book can agree perfectly while a client ledger sits overdrawn. The record must then be signed off by the COFA or a manager of the firm.
Rule 2.5 requires client money to be returned promptly once there is no longer any proper reason to hold it. Where you genuinely cannot return it, the prescribed circumstances in rule 5.1(c) allow a residual balance of £500 or less on any one client matter to be paid to a charity of the firm's choice without the SRA's authority, if the conditions are met. Above £500 on a matter you need the SRA's prior written authority. The conditions require reasonable steps to trace the owner, records of those steps kept at least six years, a central register of the payments, and retention of the charity's receipt. You may not deduct your tracing costs from the balance.
Neither. Rule 8.2 of the SRA Authorisation of Firms Rules requires the individual to be a manager or employee of the body, to consent to the designation, not to be disqualified under section 99 of the Legal Services Act 2007 and not to be an RSL. Only the COLP additionally has to be authorised to carry on reserved legal activities by an approved regulator. There is no requirement anywhere that a COFA holds an accountancy qualification, and plenty of capable COFAs are practice managers or finance managers. What the role does require is the ability to take all reasonable steps, which in practice means having competent people doing the client account work and reporting to you in a form you can act on.
A free conversation about where your client account records actually stand, what a reporting accountant would find, and which of it is worth fixing before your period end.
One short email: what has changed in the Accounts Rules, the dates coming up, and one number worth checking in your firm. No spam, unsubscribe any time.