Solicitors' Accounts Rules - assistance for accountants

Q1. What effect has the Legal Services Act 2007 had on the SAR?

A. On 31 March 2009, the rules governing solicitors, including the SAR, were amended to take account of the various changes brought about by the Legal Services Act 2007.

• The Legal Services Act introduced a new form of practice, LDPs, which allows solicitors, registered European lawyers and registered foreign lawyers to enter into practice with other specified lawyers, and up to 25% of non-lawyers approved by the SRA.
• From 31 March 2009, all SRA-regulated partnerships are required to be recognised bodies in the same way as corporate practices (companies and LLPs). Existing partnerships automatically became recognised bodies on 31 March 2009. Since 1 July 2009, sole practitioners must also be recognised.
• The SRA's move towards 'firm-based regulation' under the Legal Services Act means that the SAR now apply to the firm itself, as well as to individual managers (including other lawyer managers and non-lawyer managers) and, for the first time, directly to non-solicitor staff employed in the firm (see 'Terminology' above and rule 4).
• Although the rules continue to be framed in terms of 'solicitor', the definition of 'solicitor' in rule 2 has been expanded to reflect this.

Q2. What are the main consequences of the amendments made to the SAR on 31 March 2009?

A. There are a number of changes, but the most significant are:

Letter of engagement

• The terms which must be included in the reporting accountant's terms of engagement under rule 38(1) have changed. This reflects a new section 34(9), inserted by the Legal Services Act into the Solicitors Act 1974, which came into effect on 31 March 2009 and imposes mandatory whistle blowing obligations on reporting accountants in certain circumstances.
• This means that the letter of engagement for any accountant's report delivered on or after 31 March 2009 will need to include the new terms. Before undertaking any new work, or further work, for your solicitor clients in relation to an accountant's report, therefore, your client must provide you with a new letter of engagement incorporating the terms set out in the amended rule 38(1).

Controlled trust money

• The Legal Services Act has abolished the concept of a 'controlled trust' and this is reflected in the amended SAR. Monies which were previously controlled trust money are now classified as client money (see rule 13).
• An account used for a particular trust may still be in the name of the trustees if all the trustees of that trust are managers (see Terminology) and/or employees of the same recognised body (see rule 14(3)(e)).

Withdrawal from the client account

• The category of persons who may authorise a withdrawal under rule 23 has been widened to include all managers (see Terminology), and the criteria have been relaxed in relation to when a FILEX or licensed conveyancer employed in the practice may authorise a withdrawal. Note the new paragraph 4.1.A of the Guidelines in Appendix 3 of the SAR; firms should establish clear procedures and systems to ensure that all such persons have an appropriate understanding of the rules.

Interest provisions

• Prior to 31 March 2009, Part C of the SAR (the interest provisions) did not apply to controlled trust money. However, in accordance with section 33(3) of the Solicitors Act 1974 (as amended by the Legal Services Act 2007), rule 24 now applies to all money, including money held by solicitors as trustees.
• For the purpose of the SAR, therefore, a solicitor-trustee who holds money on behalf of a trust in a general client account must account to the trust for a sum in lieu of interest in the same way as any other client money.
•  Rule 15(2)(d) has been clarified to reflect the intention that a sum in lieu of interest may be paid into a client account for the purpose of enabling the solicitor to make a payment from the client account of all money owed to a client, as an alternative to making separate payments from the office and client accounts. However, sums in lieu of interest cannot be transferred to the client account before the solicitor is in a position to account to the client.
• Rule 28 has been repealed and it is no longer possible to apply for an interest certificate as the statutory basis for interest certificates has been removed by the Legal Services Act. However, the Legal Complaints Service will investigate a complaint concerning the payment of interest from a client or a person funding the solicitor's fees (see rule 24, note (xa)).

The notes

• The notes have always been mandatory, but rule 2(1) has been changed to make this absolutely clear.

Q3. How should I deal with the changes when completing the client's next accountant's report?

A. The changes to the SAR are not retrospective. When preparing your client's next report, therefore, you should check for compliance under the old rules up to and including the 30 March 2009, and under the new rules from 31 March 2009, using the new form of accountant's report in Appendix 5 SAR.

Q5. What qualifications must an accountant have to prepare a report under the SAR and are there any circumstances which would prevent an accountant, who is otherwise qualified, from doing the work?

A.

• The qualifications required are set out in rule 37(1) (see Q4 above for details of how to access the rules).
• The circumstances which would prevent an otherwise qualified accountant from carrying out the work are to be found in rule 37(2).
• The grounds on which an accountant can be disqualified by the SRA from preparing a report are set out in rule 37(3).

Q6. Where can I obtain a copy of the accountant's report form?

A. You can download the report form from Appendix 5 SAR, and the checklist from Appendix 4 SAR.

Alternatively, contact us. For the firm's SRA number, see Q37.

Q7. My firm has prepared the accountant's report for a firm of solicitors for the past few years. The solicitors have now asked if we can also write up their books of account. Do the SAR permit this?

A A solicitor is permitted to retain an outside accountant both to write up the books of account and to prepare the report. However, you would need to disclose this arrangement in section 7 (the declaration section) of the report (see the note to rule 37 and Q35).

Q8. I have been asked by a firm of solicitors to prepare an accountant's report for one of its branch offices. I understand that another firm of accountants will be preparing the report for the other branch office. Is this permitted under the rules?

A. Yes. Rule 48 allows a firm of solicitors to deliver separate reports where the practice has two or more offices and the firm is free to instruct different accountants to prepare those reports if it wishes.

Q9. I am preparing an accountant's report for a firm of solicitors. Due to an error by the bank, the word 'client' was omitted from the title of the firm's client account for a short period. Since it was not the firm's fault, should I qualify the report or can I treat it as a trivial breach?

A. You should qualify the report.

This is a breach of rule 14(3) which cannot be classified as a trivial breach. To ensure that the protection afforded to clients under section 85 of the Solicitors Act 1974 applies, it is essential that the word 'client' appears in the title of the account.

You can, however, send a letter with the report, explaining that the solicitor gave the correct instructions to the bank and giving details of how long it took for the error to be discovered and rectified, and any steps which have been taken to avoid the same thing happening again.

Q10. Is it acceptable for the name of the solicitors' firm to be abbreviated in the title of the client account?

A. The account must be opened using the correct name of the sole practitioner, partnership, incorporated practice or principal solicitor(s) in an in-house practice as appropriate, in accordance with rule 14(3).

However, where statements and other electronically produced documents are concerned, there is often a limit to the length of the title which banks and building societies can accommodate. In such cases, it is acceptable for the name of the firm to appear in an abbreviated form, provided the firm is readily identifiable.

The word 'client' in the title must not be abbreviated (see rule 14, note (v)).

Q11. Is a solicitor required to preserve paid office account cheques?

A. No – see rule 32, note (xiv). This provides that paid cheques (or digital images) need only be retained where they are drawn on a client account, or on an account in which client money is held outside a client account under rule 16(1)(a) or rule 17(ca) respectively.

Q12. When asking a bank to produce digital images of original cheques for the purpose of doing the accountant's checks, should I ask for a certificate of verification?

A. No, you can rely on the printed copy of the digital image as if it were the original (see rule 32, note (xvii)).

Q13. Does rule 32(10)(b) permit solicitors or their banks to retain microfilmed copies of paid cheques?

A. No – see rule 32, note (xvi). The reason for this is that a digital image will be of very good quality with a sharp edge, whereas a microfilmed copy can be blurred and will fade over time.

Q14. Can a staff member sign cheques as a sole signatory even though he/she does not come within the list of persons specified in rule 23(1)?

A.

• Yes, provided a specific authority authorising that withdrawal from client account has already been signed by at least one of the persons listed in rule 23(1). The cheque itself will not constitute the specific authority in such a case (see rule 23, note (ii)).
• However, while not a breach of the rules, it is not regarded as best practice. Paragraph 4.1 of the guidelines for accounting procedures and systems at Appendix 3 SAR states:

'The firm should have clear procedures for ensuring that all withdrawals from client accounts are properly authorised. In particular, suitable persons, consistent with rule 23(1), should be named for [inter alia] signing client account cheques.'

• Although the guidelines are intended as a broad statement of good practice, you are required under rule 43 to note in your report any substantial departures from the guidelines which you come across. This would be regarded as a substantial departure if done on a regular basis. The firm may, under rule 29, be required to justify any departure from the guidelines.

Q15. In certain cases, my solicitor would like to obtain the client's approval to the bill before transferring the costs to office account. However, rule 19(3) does not seem to allow for this once the client has been notified of the costs. Is this right?

A. Yes. Once a solicitor has 'earmarked' monies in the client account for costs and has notified the client in writing of those costs (usually by sending the bill), the monies must be transferred to the office account within 14 days, irrespective of whether the client agrees.

• Under rule 19, a client's approval to costs is not required. If the firm wants to obtain the client's approval to the proposed costs beforehand, the letter must make it clear that the fees indicated are a proposal only.
• If the client approves the costs or an amended figure is agreed, the firm will then have to comply with rule 19(2) by sending a written notification of the agreed costs or the bill before transferring the monies to office account.

Q16. My solicitor client is acting in a contentious matter. He sent a bill to the client, and notwithstanding that he had sufficient monies in the client account, he asked for a cheque in settlement of the full sum. The client sent the cheque, but outside the 14 day period referred to in rule 19(3). My solicitor says this is not a breach – is he right?

A. Yes.

• A solicitor is not required to earmark monies held on a client account for costs – e.g. it may be that the monies are held for a specific purpose or the solicitor wishes to keep the monies in the client account as monies on account of future costs.
• By asking the client to pay the bill in full, the solicitor has clearly not 'earmarked' the monies held in the client account for costs in accordance with rule 19(2) and thus rule 19(3) does not come into operation.

Q17. Would the answer to Q16 be different if the client refused to send a cheque and instead insisted on the solicitor using the monies held in client account?

A. No. It is for the solicitor to 'earmark' the monies and not the client.

• However, if the solicitor agrees to use the monies in client account for the bill, then he will have 'earmarked' the monies at that stage and must transfer them out of the client account within 14 days in accordance with rule 19(3).
• If the solicitor refuses, then this may raise questions of conduct for the solicitor (e.g. is the amount retained by the solicitor on behalf of future costs reasonable in relation to the work still to be done?), but it would not be a breach of rule 19.

Q18. My solicitor client was instructed in the administration of an estate and sent the estate accounts to the executors for approval, together with the bill. When I raised the fact that the firm had not transferred its costs from the monies held in the client account within the 14 day period, the firm said that the costs were not properly due. Is this right?

A.

•  Rule 19 only operates if the costs are 'properly due' – see note (ix).
• Generally speaking, in a non-contentious matter, the costs are not properly due until the completion of the retainer, unless the client agrees otherwise or the solicitor reserves the right to render interim bills at the outset of the retainer.
• In a probate matter, it is customary for a solicitor, when sending the estate accounts for approval, either to submit the final bill or a notification of the costs to the client in advance of completing the retainer. However, if the solicitor is not entitled to the costs until the retainer has been completed, then the 14 day period will not run until that time.

Q19. When does the 14 day period begin to run in a conveyancing transaction?

A.

• In a conveyancing transaction, a solicitor will usually send a completion statement to the client shortly before completion in order to collect the balance of the purchase monies, the stamp duty land tax, Land Registry registration fees, the solicitor's costs and any other payments due.
• The monies received from the client in response to the completion statement will be client money and must be paid into the client account under rule 15(1). (The money for costs is a payment on account of costs and therefore client money – see rule 19(4). See also rule 13, note (i)(c) in relation to stamp duty land tax and Land Registry registration fees).
• The solicitor's costs will usually become payable only on completion and rule 19(3) SAR will therefore require the transfer of these costs out of the client account within 14 days of completion.

Q20. My solicitor clients do not always indicate on their bills whether a disbursement has been paid or not. Is this a breach of rule 32(8)?

A. It depends:

•  Rule 32(8) is intended to reflect section 67 of the Solicitors Act 1974 ('the Act') which requires unpaid disbursements to "be described in the bill as not then paid".
• There is an assumption that a disbursement shown on a bill or notification of costs has been paid, unless stated otherwise. There is therefore no need to identify a paid disbursement as 'paid'.
• An unpaid disbursement must always be identified as 'unpaid' and a solicitor who has failed to do so will be in breach of the rule and section 67 of the Act.

Q21. Can a solicitor incorporate into his terms of business a clause allowing the practice to retain small leftover balances of, say, up to £20 following the end of a retainer?

A. No.

• All money left over on client account after completion of a matter is client money and must be returned to the client, no matter how small that amount might be.
• A specific obligation requiring the prompt return of client funds following completion of a matter is set out in rule 15(3). In circumstances where a solicitor needs to retain funds at the end of a matter, (e.g. for a tax payment), rule 15(4) requires the solicitor to inform the client promptly in writing of the amount retained and the reason for its retention. The solicitor must report to the client in writing at least once a year thereafter if funds continue to be retained, explaining the reason.
• Paragraphs 4.6 and 4.7 of the guidelines in Appendix 3 state that firms should have systems for the timely closure of files and prompt accounting for any surplus balances, and for keeping clients regularly informed when funds are retained. Although the guidelines are intended as a benchmark of good practice, rule 43 requires you to note in your report any substantial departure from the guidelines which you come across and solicitors may, under rule 29, be required to justify departures from the Guidelines.

Q22. What if my client refuses to bank cheques for small amounts?

A. The solicitor should speak to the client to agree how such sums should be dealt with. For example, a client may instruct the solicitor to put small sums in a charity box, or to account to the client for all small balances which arise over, say, a year by means of one composite cheque. The solicitor should confirm any standing arrangement with the client in writing, although a file note of a telephone conversation may be sufficient for a very small, one-off amount.

Q23. My solicitor client has a number of small balances left on old client ledgers where the client can no longer be found. How should these balances be dealt with?

A.  Rule 22(2A) permits solicitors, if they choose, to withdraw from client account left over balances of £50 or less per client or trust matter without first obtaining authorisation from the SRA, provided the balances are paid to a charity and the firm complies with the other safeguards listed in the rule.

In all other cases, an application for authorisation under rule 22(1)(h) will still need to be made to the SRA – see the criteria for authorisation on the SRA website.

Rule 42 requires you to check on the firm's compliance with the rule 22(2A) procedure. Note (iv) to rule 42 states that you should check on a sample basis that the solicitor has complied with rule 22(2A) and is keeping appropriate records in accordance with rules 32(8A), (9)(a) and (13A). You are not expected to judge the adequacy of the steps taken to establish the identity of, and to trace, the rightful owner of the money.

Q24. I have noticed that my solicitor client does not always comply with the interest provisions. Should I qualify my report?

A. It depends on whether the breach relates to the checks you are required to make under rule 42, or whether it is a matter outside your remit under rule 44(d).

• Under rule 42(1)(o), you are required to check that interest earned on separate designated client accounts, or in accounts opened on the client's instructions under rule 16(1)(a), has been credited to those accounts.
• If your checks have disclosed that this has not been done, you must qualify your report.

General client accounts

• The rules do not require you to check on whether a sum in lieu of interest has been paid to clients where the monies are held on a general client account.
• You should not therefore qualify your report if you discover that the solicitor is not complying with the rules in respect of a general client account. You should, however, raise the matter with your solicitor client.
• In addition, rule 43 would require you to note in your report a substantial departure from the guidelines, in the event that the firm is failing to operate a system to identify promptly situations which may require the payment of interest to clients in accordance with paragraph 2.9 of the guidelines set out at Appendix 3 SAR

Q25. How should solicitors deal with regular payments received from the LSC?

A. Position under rule 21(2):

• Under rule 21(2), regular payments received from the LSC are office money and must be paid into the office account (N.B. for the purpose of this rule, the office account must be at a bank or building society branch or head office in England & Wales – see rule 21(2)(b)).
• In addition, the solicitor must, within 28 days of submitting a report to the LSC notifying the completion of a matter, either:
  • pay any outstanding professional disbursements on those matters reported to the LSC as completed, or
  • transfer a sum for those amounts to client account (but see also rule 21, note (ix)). This provision also applies to any unpaid professional disbursements included in reports submitted at various stages during a matter (see rule 21(2)(c) & (d)).
• Certificated work -  Rule 21(2) applies to both standard monthly payments under the civil contracting scheme and monthly payments under the criminal contracting scheme. However, payments for certificated work are not covered by rule 21(2) and continue to be governed by rule 21(1).

Q26. Should solicitors be recording regular payments on the office side of the individual client's ledger or on an LSC ledger?

A. Either, but whichever method the firm chooses to adopt, the payments must be appropriately identified - see rule 32, note (v).

• Note that rule 32(1)(c) and rule 32(4) require all dealings with office money relating to any client matter to be recorded (inter alia) on the office side of the appropriate client ledger account (which in this case can be the ledger for either the individual client or the LSC), even if no client money is held in respect of the client.
• In practice, solicitors will record the receipt of the regular payment on the office side of a client ledger account for the LSC, since at the time of receipt the money is unattributable to any particular client or matter. On completion of a case, the solicitor will be able to post the relevant amounts payable on that matter to the individual client's ledger account.

Q27. My solicitor's practice does a lot of conveyancing and frequently holds money as stakeholder. What is the proper way of recording this money?

A. Stakeholder money is client money (see rule 13, note (i)(a)), and should be entered on to the client side of the client's ledger, clearly marked as stakeholder money.

Some firms enter details of all stakeholder money on a general stakeholder ledger account. However, this does not accord with rule 32(2)(b), which requires all dealings with client money to be appropriately recorded on the client side of a separate client ledger account for each client. If your solicitor client has used a general stakeholder ledger account, then you should qualify your report.

Q28. My solicitor client prepares a lot of wills as one-off transactions for clients. However, instead of opening an individual client ledger for each client, he has a general will ledger card on which he records the details of each client and the costs received. Is this a breach of the SAR?

A. Yes.

Although these are one-off transactions which do not involve the solicitor holding client money, rule 32(1)(c) and rule 32(4) require all dealings with office money relating to any client matter to be recorded in an office cash account and on the office side of the appropriate client ledger account.

Q29. How do I comply with the requirements of rule 42(1)(p) – (checks on solicitor's indemnity)?

A. The rule only requires you to make a simple check as to the existence of a policy or certificate and that the policy is:

• for the minimum cover (see below); and
• with a qualifying insurer, if applicable.

The minimum cover required for sole practitioners and a recognised body which is a partnership or an unlimited liability company is £2 million for each and every claim; and for other recognised bodies, £3 million for each and every claim.

You are not expected to check on:

• the level of any excess;
• whether the premium has been paid;
• whether there is cover for prior or successor practices.

Whilst you are not expected to conduct any further investigation or look behind the policy or certificate, if you do come across any irregularity, you would be expected to say so in your report.

Q30. In order to carry out my comparisons under rule 42(1)(f), I wrote to my solicitor client's bank, requesting the balances on all the client accounts held on behalf of my solicitor client. The bank tells me it is unable to do this unless I provide details of the accounts in question – is this right?

A. Yes, the bank will need the account information in order to give the balances requested.

•  Rule 41 requires solicitors to provide you with details of all accounts kept or operated by the solicitor in connection with the practice to enable you to prepare your report.
• The purpose of confirming the balances directly with the bank is not to find any accounts the solicitor may not have disclosed, but to ensure that the solicitor's records accurately reflect the balances at the bank on the dates you have selected – see rule 42, note(iii).

Q31. My solicitor client has an agreement with his bank for the bank to retain the paid cheques in accordance with rule 32(10). However, the bank has mislaid some of the cheques which I have asked it to produce as part of my checks. What should I do?

A. You will have to qualify your report at section 5(b).

• However, provided there is a written arrangement with the bank or building society to hold the cheques on the solicitor's behalf, the solicitor will not be in breach of the rules.
• It may be helpful to submit with the report the relevant correspondence between you and the bank.
• You may like to suggest that your solicitor client contacts the bank to ensure the bank understands the requirements under the SAR and to seek assurance that the bank is complying with the written arrangement.

Q32. I have carried out the comparisons on the two dates required under rule 42(1)(f). This has shown up a difference between the balances confirmed by the bank and the balances shown in the solicitor's books, because the former includes interest accrued on two separate designated client accounts, which had not then been notified to my solicitor. Is this a breach?

A. No. Note the difference and explain the reason.

Q33. I am preparing a report which covers a period of less than 6 months. Do I still need to carry out the comparisons required under rule 42(1)(f) on at least two dates, or will one date do?

A. The rule requires you to carry out the comparisons on at least two dates selected by you, irrespective of the period covered by the report.

• The SRA has power to waive the requirement for the second comparison. To make an application, contact the Case Working & Applications Unit in writing as follows:-
  • SRA, Ipsley Court, Berrington Close, Redditch, Worcs, B98 0TD (DX 19114 Redditch)
  • Fax: 01527 883233
  • Email: cau@sra.org.uk

Q34. Does a final report need to be delivered when a partnership converts into an LLP, but the year end remains the same?

A. Yes. The partners will need to deliver a final accountant's report covering the period from the end of their last accounting period up to the date on which the monies are transferred into the name of the LLP, or until they cease to hold any client monies as partners, whichever is later.

Q35. The accountant's report form contains a section requiring me to give details of any relationship or business arrangements which I, or members of my firm, have or have had with the solicitor's firm. What exactly is required and why?

A.

What is required

• As the person signing the report, you should make reasonable enquiries of those partners (or, if your practice is a company or LLP, those directors or members) and/or staff members involved in preparing the report and complete the form accordingly.
• You are not expected to make enquiries of everyone else in the practice, but you should include any relevant information of which you personally are aware.
• 'Related to' – This would include, e.g., relationships which arise through marriage. It is left to you to decide what should be disclosed, but the SRA wants accountants to give as much information as possible.
• 'Former client of the solicitor' – You should disclose any solicitor-client relationship with any of the individual solicitors covered by the report, even if it arose when the solicitor in question was with a different firm.
• As the form makes clear, disclosure of ties with the solicitor's practice does not disqualify you or your firm from making the report, although you will need to have regard to your own professional rules in this respect.

Q36. My solicitor client acted for me personally three years ago. As required, I indicated on the last accountant's report that I was a former client. I am now completing the report for the current year – do I have to tick the box again, even though the firm have not acted for me since?

A. Yes. This is a continuing requirement, but it would be helpful to indicate the date on which the firm last acted for you.

Q37. The accountant's report form has a box for the reporting accountant to fill in the firm's SRA number. How do I find out what this is?

A. You can find the number by contacting the Contact Centre (tel 0870 606 2555 or email contactcentre@sra.org.uk) or by visiting the Law Society website.

Q38. I have noticed some small breaches of the rules which I do not really think fall within the definition of a 'trivial breach' under rule 47, notes (iv) and (v). I have discussed this with my solicitor client, who is upset at the prospect of my qualifying the report and insists that I am interpreting rule 47 too strictly. What should I do?

A. If, in your judgement, the breaches that have occurred are more than trivial, then you must qualify the report.

• If you are uncertain as to whether a breach can properly be described as trivial, you may wish to contact Professional Ethics to discuss it, but ultimately it must be your decision.
• A qualified report will be referred to Forensic Investigations for a view as to whether any further action is necessary. It is therefore helpful if you include (either in the report or in a covering letter) any relevant information concerning the breach – e.g. as to the seriousness of the breach or, if it arose as a result of a systems failure, what steps have been taken to prevent the breach recurring.

Q39. Can I deliver the report by fax or email?

A. Yes, you can send it to us by

• Fax: 01527 512956
• Email: cau@sra.org.uk
• Post: SRA, Ipsley Court, Berrington Close, Redditch, Worcs B98 0TD
• DX: 19114 Redditch

Please note that a hard copy is no longer required in addition to the faxed or emailed copy, but we would advise keeping a copy of the fax transmission or email as proof of delivery.

Please note that an incomplete report form will not be deemed to have been delivered in time. If you are unable to provide all the information required in the report, you or your client must request an extension on or prior to the due date (see Q40).

Q40. What should a solicitors' practice do if it cannot deliver the accountant's report by the due date?

A. Your or your solicitor client must contact the Caseworking and Applications Unit (CAU) either in writing or by email or fax to request an extension of time. We can accept requests up to and including the due date but would prefer that you give us at least five working days to consider your request.

The SRA will not consider a request for an extension of time if the request is received after the due date.

When requesting the extension, you must explain the reason for the delay and indicate how much extra time is required. For contact details, see Q39.

• CAU can normally grant extensions of up to 3 months.
• Where the request is for more than 3 months or there are other issues, the application will be referred to the Regulatory Investigations Unit for further consideration.

Q41. My solicitor clients want to change their year end. Who should I contact and are there any restrictions?

A. You need to write, fax or email with details of your proposed new year end to the Caseworking and Applications Unit (CAU) (for contact details, see Q39).

In changing the year end, the accounting period can be reduced or extended up to a maximum of 18 months, but:

• where the change of year end will result in the accounting period being extended beyond twelve months, the solicitor must give written notification to CAU before the deadline for the delivery of the report under the old accounting period (see rule 36(4)).
• if the request is for a first report, CAU can grant a period up to 15 months, but requests for more than 15 months will be referred to Regulatory Investigations for consideration.

Where the change in year end results in the accounting period being reduced, the report must be delivered within six months of the new year end, i.e. earlier than was previously the case.

Q42. Is an accountant's report, prepared under the SAR, the same as a Companies Act audit?

A. No.

• An SAR report is prepared under the Solicitors Act and not the Companies Act.
• Its purpose is to ensure that client monies have been kept safe in accordance with the SAR and it is not concerned with the financial health of the solicitor's practice.
• If the practice is a recognised body which is a company or limited liability partnership, it will have to deliver an accountant's report to the SRA, in addition to filing annual accounts and returns as appropriate at Companies House under the Companies Act.

Q43. Does the SRA provide any guidance on appropriate accounts software packages?

A. No. However, the Law Society has produced a software solutions guide.