Ethics guidance

Notes for AR2 - accountant's report form for an overseas practice

Issued on 5 January 2012

Download Form AR2

Introduction

The types of firm set out below must deliver an accountant's report annually, in respect of offices outside England and Wales (E&W), on their compliance with rule 50.3 of the SRA Accounts Rules 2011 (Accounts Rules).

The report must be prepared by an accountant qualified under rule 50.5 of the Accounts Rules.

How to use the form

Please complete all the relevant boxes with the information required.

If you make an error during completion of the form please put a line through any deletions. Do not use liquid paper.

How to contact us

Throughout these notes we refer you to the Contact Centre

If this does not deal with your enquiry then contact Professional Ethics helpline.

Frequently asked questions

Where do I send the form?

Your completed form and supporting documentation should be sent to the .

Will I receive a receipt for the form?

The SRA will only issue a letter of receipt to the firm on request.

Who has to deliver a report?

For the meaning of "lawyer of E&W", "manager", "overseas law firm", "recognised body", "licensed body", "lawyer-controlled body" and "REL-controlled body", see the definitions below.

Sole practices

A solicitor's sole practice which has held or received client money in respect of an office outside the UK must deliver an accountant's report, naming:

  • (a) the sole practitioner and
  • (b) any other solicitor in the firm who has held or received client money as a named trustee.

A solicitor's or registered European lawyer's (REL's) sole practice which has held or received client money in respect of an office in Scotland or Northern Ireland must deliver an accountant's report, naming:

  • (a) the sole practitioner and
  • (b) any other solicitor or REL in the firm who has held or received client money as a named trustee.

Partnerships and corporate practices outside the UK

A lawyer-controlled body which has held or received client money as a firm in respect of practice from an office outside the UK must deliver an accountant's report, naming:

  • (a) the recognised body or licensed body,
  • (b) any lawyers of E&W and non-lawyers who are managers of the recognised body or licensed body,
  • (c) any solicitor who has held or received client money as a named trustee.

If the lawyer-controlled body has not held or received client money as a firm, a report will nevertheless be required from any of the following who have held or received client money as a named trustee:

  • (a) a solicitor,
  • (b) a lawyer of E&W who is a manager of the recognised body or licensed body,
  • (c) a non-lawyer who is a manager of the recognised body or licensed body.

A report is also required from the individual lawyer of E&W managers of an overseas law firm which is controlled by lawyers of E&W, if the firm has held or received client money in respect of practice from an office outside the UK.

Partnerships and corporate practices in Scotland or Northern Ireland

A lawyer-controlled body, or an REL-controlled body, which has held or received client money as a firm in respect of practice from an office in Scotland or Northern Ireland must deliver an accountant's report, naming:

  • (a) the recognised body or licensed body,
  • (b) any lawyers of E&W, RELs, European lawyers registered with the Bar Standards Board (BSB) and non-lawyers who are managers of the recognised body or licensed body,
  • (c) any solicitor or REL who has held or received client money as a named trustee.

If the lawyer-controlled body, or REL-controlled body, has not held or received client money as a firm, a report will nevertheless be required from any of the following who have held or received client money as a named trustee:

  • (a) a solicitor,
  • (b) an REL,
  • (c) a lawyer of E&W who is a manager of the recognised body or licensed body,
  • (d) a European lawyer registered with the BSB who is a manager of the recognised body or licensed body,
  • (e) a non-lawyer who is a manager of the recognised body or licensed body.

A report is also required from the individual lawyer of E&W or REL managers of an overseas law firm which is controlled by lawyers of E&W and/or RELs, if the firm has held or received client money in respect of practice from an office in Scotland or Northern Ireland.

Definitions

"Client money" means money received or held for or on behalf of a client or trust (but excluding money which is held or received by a multi-disciplinary practice – a licensed body providing a range of different services – in relation to those activities for which it is not regulated by the SRA).

"Lawyers of E&W" are solicitors with current practising certificates or individuals authorised to practise in E&W by an approved regulator other than the SRA (but excludes members of Establishment Directive professions registered with the BSB).

A "manager" is a partner in a partnership, a member of an LLP, a director of a company or, in relation to any other body, a member of its governing body. In the case of a partnership, "manager" includes any person held out as a partner, including a "salaried partner", "associate partner" or "local partner".

An "overseas law firm" is any law firm operating wholly outside E&W.

A "recognised body" is a partnership, limited liability partnership (LLP) or company recognised by the SRA under section 9 of the Administration of Justice Act 1985.

A "licensed body" is a body licensed by the SRA under Part 5 of the Legal Services Act 2007.

A "lawyer-controlled body" is a recognised body or licensed body in which lawyers of England and Wales constitute the national group of lawyers with the largest (or equal largest) share of control of the recognised body or licensed body, either as individual managers or by their share in the control of bodies which are managers.

An "REL-controlled licensed body" is a recognised body or licensed body in which RELs, or RELs together with lawyers of England and Wales and/or European lawyers registered with the BSB, constitute the national group of lawyers with the largest (or equal largest) share of control of the recognised body or licensed body, either as individual managers or by their share in the control of bodies which are managers, and for this purpose RELs and European lawyers registered with the BSB belong to the national group of E&W.

Firm/individuals ceasing to be subject to rule 50.3

When a firm has ceased to be subject to rule 50.3 of the Accounts Rules, a report must be delivered up to that date. This may arise, for example, when a sole principal retires, or when a firm or its overseas office closes or is taken over, or when a firm ceases to hold client money, or when a change in the composition of a firm takes it outside the scope of the rules.

Form of accountant's report

A different form of accountant's report may be used, provided it complies with rule 50.6 of the Accounts Rules.

A firm which has offices both in and outside E&W may include all its offices in the "domestic" accountant's report, provided the form is amended to indicate that it also deals with compliance with rule 50.3 of the Accounts Rules.

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