Solicitors Regulation Authority Limited Financial Statements for the year ended 31 October 2024

June 2025

Foreword

Good regulation is key to delivering public trust and confidence in solicitors and law firms. This report shows we have made good progress against our four corporate strategy objectives, although 2023/2024 has been a challenging year. We have had to respond to new pressures, with significant shifts in the risks in the legal sector – most notably dealing with the impacts of the increasing number and size of interventions we have had to carry out into larger firms.

In response, we launched our Consumer Protection Review at the start of 2024 – a large programme of work to make sure we can continue to protect consumers, focused on safeguarding client money. Changes in the market have also driven us to move more quickly on work to improve how we manage our data and join up intelligence, so we can better spot risks in the market.

The scale of our Consumer Protection Review means that we have had to look at our plans and reprioritise. This resulted in some projects being delayed, and this has been a significant factor in SRAs Limited's £5.6m surplus for the 2023/24 year (2022/23: £1.4m), with our free reserves within the range set by our Board.

We are in a good financial position underpinned by better performance of our investments. Our consolidated expenditure has increased, but that has nearly all been driven by a large increase in candidates taking the SQE, which has been funded through their fees.

We will use this year's surplus to fund deferred programmes of work in the 2024/25 financial year. In addition to expecting to see expenditure exceed income during 2024/25, we anticipate the need for additional investment in our work to better manage data and identify and respond to new and emerging risks. This will be a transformational piece of work that will enable us to regulate more effectively. It will, however, require significant long-term investment – both in people and technology.

If trust and confidence is to be maintained, it is critical that the legal sector is backed by modern and fit-for-purpose regulation, and that we are an open, transparent, efficient and effective regulator. Good governance and financial management are central to that.

We hope you find the contents of this report helpful. More information is available on the SRA website, including regular reporting on decision making and performance. We are always open to hearing your views and your feedback.

Anna Bradley
Chair of the Board, Solicitors Regulation Authority

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Strategic report

The directors present their strategic report on the group for the year ended 31 October 2024.

Introduction to the Solicitors Regulation Authority

The Solicitors Regulation Authority Limited (SRA Limited) was incorporated on 18 May 2020. On 1 June 2021 we began operating, carrying out a number of functions previously undertaken by the Solicitors Regulation Authority (SRA) as part of the Law Society (TLS), a Royal Charter Company (RC000304). The year ended 31 October 2024 is our third full year of operating.

The SRA is the regulator of solicitors and law firms in England and Wales. Our purpose is to drive confidence and trust in legal services. We work to protect members of the public and support the rule of law and the administration of justice. We are focused on the issues that can transform legal services, making sure the profession delivers the high standard of service the public deserves.

The SRA is a public benefit entity.

Business review

2023/24 was the first year of our 2023–2026 corporate strategy, which focuses on four objectives:

we will deliver high professional standards
we will strengthen our risk-based and proactive approach
we will support innovation and technology
we will be an authoritative and inclusive organisation, meeting the needs of the public, consumers, those we regulate and our staff.

We are pleased to report some of our key achievements in delivering these four strategic priorities.

Objective one: we will deliver high professional standards

Protecting the public

Chartered Institute of Legal Executives

In summer 2024, our Board agreed it would be willing to regulate Chartered Institute of Legal Executive (CILEX) members after being approached by CILEX in 2022. We believe the change could simplify the regulatory landscape and offer tangible benefits to consumers. We, alongside CILEX, will look to submit an application to the LSB to approve the changes.

Investigation and Enforcement – timeliness of work

We have been progressing work to improve both the timeliness and quality of our investigation and enforcement work. A key priority has been reducing the number of longstanding investigations. We have made good progress on this: in October 2023, we had 161 cases which were more than 24 months old. We reduced this to 60 such cases by October 2024.
Throughout 2023/24, we hit our targets for completing 93% of cases in 12 months and 95% of cases within 18 months. For three of the four quarters in 2023/24, we hit our target for completing 98% of cases within 24 months. For comparison, in 2022/23, we hit the same 12-month and 18-month targets in each quarter. We hit the 24-month target in one quarter in 2022/23.
The performance against our stretch target of resolving 70% of investigations within 10 months held between 50% and 60% for the year. In 2022/23, this target roughly held between 55% and 65%. We have plans in place including new tools, guidance and training that we anticipate will deliver an improved performance against this target.

Continuing competence

We delivered a programme of work to further enhance how we make sure solicitors and firms meet our continuing competence obligations.  This included placing restrictions on solicitors practising unsupervised if they did not confirm their competence to us. We also further developed our resources to help solicitors maintain their competence and published our second annual assessment of continuing competence. It found that most firms we regulate have robust systems and controls in place to maintain solicitors' competence and deliver good-quality legal services. However, we identified family and landlord and tenant law as areas we want to explore in more detail. In the coming year, we will carry out thematic inspections, review sample training records and engage with stakeholders to understand more about firms' supervision arrangements. We will also consider what further work we can do to make sure that solicitors maintain their competence and plan to issue a consultation on our proposed approach this year.

Anti-money laundering and financial crime regulations

When we find serious failings in this area, we will take regulatory action and did so in 78 cases in 2023/24. In more than half the cases, the most common breaches related to firms having inadequate risk assessments or anti-money laundering (AML) controls. We issued 44 fines totalling almost £600,000. The SDT handed out two fines with a combined total of more than £500,000 as well as a condition placed on a solicitor's practising certificate. Please note, our AML work is reported to a different financial year, so these figures relate to 6 April 2023 to 5 April 2024.
For comparison, in 2022/23, we took regulatory action in 47 cases, issuing 23 fines totalling just over £60,000. The increase in the regulatory action we took is due to a mix of increased proactive action (which you can read more about under objective two) and reports made to us concerning AML. The reason for the increase in the value of fines between 2022/23 and 2023/24 is due to our increased fining powers. The SDT handed out six fines with a combined total of almost £76,000 in 2022/23. Our AML work for 2022/23 relates to 6 April 2022 to 5 April 2023.
We set out below – under objective two – how we have increased our proactive work to tackle the risks of money laundering and how this has driven significant increases in firm compliance.
The Economic Crime and Corporate Transparency Act 2023 gives us unlimited fining powers to sanction certain breaches that involve economic crime. This came into force in March 2024, and we consulted on developing our financial penalties framework in light of this. We will consider any responses and feedback we receive about our proposals in finalising our position. We will only be able to issue these types of fines for breaches of our rules which took place after the Act came into being.

The Solicitors Qualifying Examination

The 2023/24 year was the third year of running the Solicitors Qualifying Examination (SQE), the single rigorous assessment for all aspiring solicitors. It was introduced to give assurance of consistent, high standards at the point of admission. Of the 9,602 individuals admitted in 2023/24, 27% came through the SQE route (2,596 individuals). This proportion will continue to grow in the years to come and has already increased since 2022/23. Of the 8,818 individuals admitted in 2022/23, 17% came through the SQE route. The assessment consists of two parts: SQE1, which tests functioning legal knowledge and SQE2, which tests practical legal skills. Six examination sittings took place in 2023/24 across test centres in the UK and around the world. The majority of individuals still qualify through the Legal Practice Course route. However, in the coming years, fewer people will be eligible to take this route as it is phased out, and most people will have to take the SQE to qualify.
The independent reviewer for the SQE found that the SQE continues to perform well and there can be confidence it is a rigorous assessment. And, to support access to legal services in England and Wales, a single legal jurisdiction comprising two nations and two official languages, we now offer the entirety of the SQE in Welsh.
We progressed work on commissioning an independent evaluation of aspects of the SQE route to qualification – demonstrating our commitment to understanding the early impact of the SQE's introduction and making improvements if necessary. We also remain committed to finding ways in which we can publish SQE performance data by provider, to help candidates make informed choices about how they prepare for the assessment.

Equality, diversity and inclusion (EDI)

Objective two: we will strengthen our risk-based and proactive approach

We are looking to improve how we use our data about law firms and complaints to spot patterns – for instance, where certain types of firm or areas of work present higher risks to the public. We have set up a new Risk and Intelligence Framework to draw together our proactive views on risk. This is part of redoubling our efforts to ensure we have robust processes in place to identify and act on emerging risks.
We carried out a number of thematic reviews in areas where we are seeing newly emerging risks, such as strategic lawsuits against public participation and conduct in disputes. We also carried out thematic reviews of areas which we know carry a heightened risk, such as AML, or which have been of ongoing concern for some time, such as asylum services. As part of our thematic reviews, we visit firms, review files and more widely share our findings. If we see standards falling short of what we expect, we can take action and refer the matter for an investigation, if necessary.
Our Transparency Rules are there to help the public make informed decisions when choosing a legal services provider. As part of our proactive work, we have carried out reviews of more than 1,000 firms in the course of a project to check compliance with the rules. Since we started this work in mid-2023 and until the end of the 2023/24 year, we have issued 35 fixed financial penalties and 577 letters of warning. Please note, these regulatory actions are a result of this proactive project alone and not any wider investigations work. We will continue our work on this project in the 2024/25 year.

Proactively regulating anti-money laundering and the sanctions regime

Preventing money laundering is a priority for the legal sector. We have a rolling programme of inspections to ensure firms' compliance with the money laundering regulations. We almost doubled the number of proactive engagements (inspections and reviews) we carried out (545), compared to the previous year (273). Through this work, we have helped 394 firms to improve their AML controls, and we have seen marked improvements in the way firms assess risk. Only 12% of client and matter risk assessments were deemed to be ineffective, compared to 51% in the previous reporting year. Please note, our AML work is reported to a different financial year, so the above figures relate to 6 April 2023 to 5 April 2024. Our AML work for 2022/23 relates to 6 April 2022 to 5 April 2023.
During the year, we wrote to more than 1,000 firms with guidance and support on complying with the UK's financial sanctions regime. The UK financial sanctions regime is operated by the Office of Financial Sanctions and the measures are imposed by the government. We gathered data from a number of firms and, based on their responses, identified a large number of firms that had indicated they had poor controls in place. The letters sent include guidance on complying with the regime and guidance on completing firm-wide sanctions risk assessments, including a template for firms to use.

Objective three: we will support innovation and technology

Objective four: we will be an authoritative and inclusive organisation, meeting the needs of the public, consumers, those we regulate and our staff

Financial review

This financial review looks at the SRA's and the Solicitors Indemnity Fund (SIF)'s activities and income and expenditure. The balance sheet review looks at the assets and liabilities of the SRA and the SIF.

Income

The majority of our funding comes from annual fees set each year. We charge these fees to individuals (primarily the practising certificate fee) as well as to firms (recognised bodies and licensed bodies). These are mandatory and must be paid for individuals and firms to practise as solicitors in England and Wales.

These fees are invoiced from 1 October to cover the following November to October period. Therefore, the fee income recognised in the 2023/24 year was largely collected before the start of the financial year. The amount recognised in the financial year was £68.1m (2023: £60.6m). At the end of October 2024, there were 171,697 practising solicitors and 9,197 solicitor firms (2023: 166,256 and 9,377, respectively). The types of these firms range from sole practitioners to large firms with a global presence and thousands of solicitors. There is a long-term trend of an increase in the number of practising solicitors and a gradual reduction in the number of firms.

Not all solicitors are currently practising law. There were more than 206,000 solicitors on the roll at the end of October 2024. Non-practising solicitors who wish to remain on the roll of solicitors pay an annual fee of £20. At the end of October 2024, there were 35,090 non-practising solicitors on the roll (2023: 35,434).

For 2023/24, the individual practising certificate fee was set at £307, an increase from £286 in 2022/23. We keep around half the fees collected. We collect a proportion on behalf of TLS, to fund elements of its work, and levies payable to external bodies, including the LSB and Legal Ombudsman. TLS's share of the practising fee income is reported in The Law Society Group's consolidated accounts. Around £162 (2023: £151) of the 2023/24 fee funded our work. Our portion of the 2024/25 fee increased by 1% to £164.

Fees for firms vary and are related to the turnover of each firm. The 2024/25 fee collection window opened on 1 October 2024 and closed on 31 October 2024. On 31 October 2024 £68.3m (2023: £64.5m) worth of invoices had been raised and recognised as deferred income for the 2024/25 renewal year. This means the amount invoiced will appear in the statement of comprehensive income in the 2024/25 financial statements. The amount invoiced will appear alongside the expenditure for the year, which the amounts raised will fund.

In addition to the practising fees, a levy is collected on behalf of the SRA Compensation Fund (compensation fund). The compensation fund is a non-consolidated entity which funds compensation claims against defaulting practitioners and related management costs. All individual practising certificate holders, except for those working for the Crown Prosecution Service, and by all firms holding client money pay contributions towards the fund. The above figures exclude invoices raised and cash collected on behalf of the compensation fund. Information on the compensation fund is available in its financial statements.

Other income

We recognise income from recharging the costs of managing the compensation fund (administration, maintenance, applications). This totalled £15.6m in the financial year (2023: £23.7m). These costs are recharged to the fund in accordance with an agreed methodology and cost allocation rates. The most significant element of the recharge relates to third-party intervention and our own legal costs, which totalled £11.7m (2023: £20.4m). The 2023 year included the cost of the Axiom intervention in October 2023. Other costs include indexing, archiving and storage of the files of the firms we intervene into.

Additionally, we collected £4m in administration fees for other applications from individuals and firms (2023: £3.6m).

Education and training

The main component within education and training income is the Solicitors Qualifying Examination (SQE). This is the assessment aspiring solicitors need to take to qualify. The SQE is provided by Kaplan SQE Ltd., working with us and on our behalf. During the financial year, we recognised £36.6m (2023: £19.2m) in income related to assessment and delivery costs of £36m (2023: £18.8m). This is in addition to the internal costs associated with delivering the exam. We expect the SQE income and expenditure figure to continue to increase over the coming years as more candidates sit the examination.

To be eligible to provide education, research or vocational training – specifically the delivery of the SQE – any surplus from supplying these services must only be used for the continuation or improvement of such services.

In addition to the examination delivery costs, we also incur internal costs through our Education and Training team. The work this team does supports the SQE delivery, as well as our other education and training activity. The overall cost of this team is greater than the income we receive, and no surpluses have been realised to date. If we received a surplus, we would separate it and invest it solely in education and training, and not any other area of our responsibilities.

Solicitors Indemnity Fund (SIF) consolidation

The SIF is a special purpose entity set up in 1987 to provide compulsory professional indemnity cover to all solicitors. In 1999 TLS decided to move to an open market professional indemnity insurance (PII) system and so SIF stopped receiving premiums and stopped providing primary PII cover to solicitors. However, using residual funds that had been collected from previous years, TLS decided that, for a time-limited period, the SIF would continue to provide run-off cover to solicitors and firms who had been closed for more than six years (and were therefore beyond the period of mandatory run-off cover required under the new system).

Responsibility for indemnification arrangements was delegated to the SRA in 2006, at which point it took over responsibility for governance of the operation of the SIF from TLS. On 1 October 2023, the SRA took over the management of the SIF, to provide assurance of future consumer protection for post six-year negligence claims and achieve a reduction in the scheme's running costs compared to the previous arrangements, so that more money would be available for SIF's core purpose of settling claims.

From 1 October 2023, the SIF became a subsidiary of the SRA, with its financial statements consolidated in these SRA group financial statements. The SRA's financial statements can be seen in isolation in the:

company income and expenditure statement,
statement of comprehensive income and company balance sheet, and in the
company-only columns of the notes to the financial statements.

From 1 October 2023 the SRA took over responsibility for managing and administering SIF, a function previously undertaken by Solicitors Indemnity Fund Limited (SIFL). In doing so, the SRA effectively took control of the SIF and the Board considers that the SIF and SIFL became subsidiaries of SRA from this point. SRA and SIF are therefore consolidated within these financial statements (SIFL ceased trading in 2024 and was dissolved on 25 February 2025). Any transactions of SIFL within the financial year are included in the consolidated results.

This year, the overall consolidated surplus is £2.3m (2023: £21.8m). The majority of the surplus in 2023 arose because of the acquisition of the fair value of SIF's net assets of £20.6m. Excluding the SIF consolidation, the surplus for 2022/23 was £1.2m.

Fair value of SIF net assets

From 1 October 2023, we took responsibility for managing and administering the SIF. The fair value of the SIF's net assets has been consolidated within the financial statements of the group. As a public benefit entity, we recognised this fair value in our income in 2022/23. The fair value of the net assets as of 1 October 2023 was £20.6m. This had reduced to £20.1m at the end of October 2024.

Expenditure

Our total operating expenditure for the SRA for the year was £120.7m (2023: £106.8m). This increase is mainly because of increased SQE costs, which were recovered via SQE fees, leading to the related increase in income. SRA staff related costs for the year were £45.2m (2023: £39.9m). This rise is due to an increase in headcount to deliver increased activity. There was a decrease in the costs of administering the compensation fund, which, as noted above, were recovered from the compensation fund.

The SIF's operating expenditure for the year was £4m, the majority of which arose on the movement in the value of its indemnity provisions. In the 2022/23 year, there was £0.5m credit on operating expenditure, again due to the movement in provisions.

Fixed assets

Group tangible assets increased in value, from £1.4m to £1.6m. This was due to significant investment in computer equipment (£0.9m), with a depreciation charge in the year worth £0.7m.

Group fixed asset investments have increased by £4.6m to £39.1m. The SRA's investments increased by £1.3m (15%). The SIF's investments increased by £3.3m (12%).

The SRA Limited's investment holdings represent long-term reserves and are not needed to fund day-to-day operations. They are invested with Cazenove, with the objective of achieving a long-term return on investment.

The group's investment strategy is to hold a varied and diversified portfolio to maximise returns at a level of risk agreed by the directors. The group holds an investment portfolio consisting of equities, sovereign and investment grade bonds, as well as other securities and cash. This provides the group with a constant income from investment. There remains volatility in the underlying value of the funds within the investment portfolio, which is accounted for as either an unrecognised loss or gain in the Statement of Comprehensive Income. Further details are provided in note 10.

Debtors

Year-end trade debtors are at their highest following the annual practising fee renewals exercise, undertaken during October, and reduce rapidly in November each year. Group debtors have reduced by £10.8m from £44.6m in 2023 to £33.8m in 2024. This is due in part to earlier receipt of annual practising certificate income which meant that the trade debtors were £26.8m, £3.8m lower than the figure of £30.6m in 2023. In 2023 debtors included a balance of £5.3m owing from the SRA Compensation Fund to the SRA however this balance was £nil in 2024 with £10.4m in creditors owed to the Compensation Fund. This relates to the timing of cash payments between SRA and the Compensation Fund.

Cash

Cash balances are also at their highest level following the annual practising fee renewals exercise in October 2024. The cash balance at the end of the year is therefore higher than at most times during the year. Cash flows continue to be positive in November and then gradually reduce through the remainder of the financial year, with a relatively smooth flow of annual expenditure until the next renewal period. Under our investment policy, we aim for our cash balances to be actively managed to maximise returns as much as possible while limiting the risk to funds. The average cash balance held during the year was £55.8m (2023: £51.7m).

Provisions

The company provision for disciplinary proceedings, intervention and litigation costs as of 31 October 2024 was £14.6m (2023: £14.8m). The provision represents the cost of fees to complete ongoing matters at the year-end. Costs incurred during the year in relation to interventions are recharged in full to the compensation fund.

The consolidated balance sheet includes a total SIF claims provision of £11m (2023: £7.9m). This provision is for current and future claims against SIF and the cost of dealing with those claims. The provision for claims incurred but not reported is for claims not yet received against SIF but expected to be received in the future in relation to events that have already occurred. This is estimated using external actuarial advice, based on all available information at that time, including historic trends and recent developments and amounts to £4.4m (2023: £3.8m). Further information is provided in note 2 r) and note 3 of the financial statements. The remainder of the provision includes £2m (2023: £2.2m) for claims reserves and £4.6m (2023: £1.9m) for claims handling costs.

Reserves

Group reserves

The group balance sheet reports net assets of £44.0m, up from £37.8m in 2023. The company balance sheet shows net assets of £23.9m (2023: £17.9m), of which £22.3m (2023: £16.5m) is unrestricted reserves once tangible fixed assets are excluded.

The reserve requirements of the SIF are very different in nature to those of the SRA and need to be considered separately. SIF had net assets of £20.1m at the balance sheet date, and a surplus for the year of £0.1m (2023: £0.4m). A reserves policy was established during the 2023/24 financial year and is presented below.

The reserves of SRA can only be used to fund the operations of the SRA and the reserves of the SIF can only be used to fund the operations of the SIF. Reserves are not transferable between the SRA and the SIF. Additionally, to be considered an eligible body for the delivery of education activities, any surpluses in the future arising from these activities can be used only for the continuation of such activity.

Company reserves

Our reserves policy for the SRA outlines a requirement to hold between £17.7m and £25m of unrestricted reserves after tangible fixed assets are excluded. The policy is guided in part by guidance issued by the LSB, which regulates the SRA. The policy identifies the long-term level of reserves considered appropriate, with consideration of:

potential reductions in income
additional liabilities that may arise or commitments that may be made
the risk of unexpected expenditure in relation to legal costs
planned increases in expenditure.

The reserves range represents between approximately three to five months' expenditure for the financial year when the policy was agreed and excludes SQE income and expenditure. This is appropriate because the SQE is an almost entirely cost-neutral activity. The SQE income and expenditure is expected to grow significantly in future years.

Our Board considers the reserves position each year. It last reviewed and agreed the position in April 2025. We must outline our reserves policy and any plans to move towards the minimum level of reserves (if not already at that level), as part of the annual approval of practising fees. This is an LSB requirement. We will consult on the fees for 2025/26 in the summer of 2025. As mentioned above, unrestricted reserves (excluding fixed assets) stand at £22.3m, which is well within the targeted reserves policy.

The SIF reserves

The reserves policy for the SIF considers total assets less current liabilities as a proxy for a specific general reserves figure that is net of claims provision. The policy is for this to be between 50% and 400% of the last claims provision value provided by independent actuaries. For the 2023/24 year and until we have an updated independent actuarial valuation, this represented a value range of from £5.5m to £44m.

Financial key performance indicators

The directors consider that the key financial performance indicators are as follows:

consolidated income for the year was £124.3m (2023: £127.8m)
consolidated operating surplus for the year was £0.5m (2023: £20.6m)
company unrestricted reserves as of 31 October 2024 were £22.3m (2023: £16.5m)

Risk governance and management

Our risk management framework sets out the policy and framework for managing and obtaining assurance on all risks likely to adversely impact on the successful delivery of our strategic and regulatory objectives.

It provides the guiding principles within which the risk management process is managed and operated. In accordance with that framework, we maintain risk registers at three levels:

high-level risks are documented on our strategic risk register
a mid-tier risk register brings together more significant or organisation-wide risks which are not at the strategic level
both the strategic and mid-tier registers are underpinned by operational risk registers across the organisation.

The principal risks relate to delivery of crucial areas of work, such as investigations and enforcement, and our approach to emerging technology, EDI and risk-based regulation.

To support the transparency of a structured risk reporting cycle, the strategic risk register is presented to our Audit and Risk Committee and Board three times a year. The Audit and Risk Committee also reviews the mid-tier risk register. Management of both these registers sits with the Executive Team, which monitors them regularly.

We continued to enhance risk governance and management systems during this period. This has included deep dives on strategic risks by our Audit and Risk Committee, a wider internal quarterly review of strategic and mid-tier risks and dedicated training and awareness sessions.

We have been ever mindful of the increasing cyber security risk, as faced by most other organisations. We are certified to the ISO:27001 standard in information security and apply all the controls contained within.

We continue to invest in our technical resources and capabilities to deal with existing and emerging risks as effectively as we can. This includes testing and scenario planning to prepare for incidents.

Over the course of the year, we have also implemented a new Governance Risk and Compliance platform. This will give us the ability to gain better insights into our risk and control framework and identify areas for development.

Statement of compliance with section 172 (1) of the Companies Act 2006

Directors' duties

The directors must act in a manner which complies with their duties as set out in the UK Companies Act 2006. In summary, section 172 of the Act requires a director of a company to act in a way they consider, in good faith, would most likely promote the success of the company for the benefit of its members. In doing this, the director must have regard, amongst other matters, to:

the likely consequences of any decision in the long term
the interests of the company's employees
the need to foster the company's business relationships with suppliers, customers and others
the impact of the company's operations on the community and the environment
the desirability of the company maintaining a reputation for high standards of business conduct
the need to act fairly between members of the company.

The following is an overview of how the Board has performed its duties in this regard during this year.

Key decisions

In December 2023, the Board decided the scope of a review of consumer protection, to consider firm approval and monitoring processes, rules on holding client money, and the compensation fund model.
At its July 2024 meeting, the Board decided that there would be a small increase in our share of the individual practising certificate fee, increasing from £162 to £164. It also decided that the 2024/25 compensation fund contribution would increase to £90 per individual and £2,220 per firm. This followed a public consultation and was approved by the LSB in September 2024.
In July 2024, the Board concluded that it would be in the public interest for us to take on the regulation of CILEX members, and it decided it was willing to do so. This decision was on the basis that this outcome would simplify the complex regulatory landscape, making it easier for consumers to navigate, bring more consistent standards and levels of protection and result in efficiencies.
In September 2024, the Board decided to extend the term of the Chair for two years. This was in response to new and emerging challenges, and the need for maintaining stability at board level to help manage them, and the required organisational development.
In October 2024, the Board agreed the investment and reserve policies for the SIF. It also approved a target to halve our greenhouse gas emissions by 2030 and reduce them by 90 per cent by 2050, with a related plan to deliver these targets.

People

Our people are fundamental to the successful performance of the organisation. Employees are regularly kept updated through monthly organisation-wide business updates which provide an opportunity to feedback on key business activity and upcoming changes. The staff forum and staff trade union offer employee representatives regular access to members of the senior management team to address important and topical issues. The structure of annual pay awards is agreed with the trade union each year. Union members are consulted before any decisions are made.

Throughout the year, the Board receives regular updates on matters relating to employees as part of quarterly performance reporting. An annual staff survey offers employees the opportunity to provide their views in an anonymous format. The results of these surveys are provided to the Board and clear action plans are developed and delivered based on the feedback. In this reporting year, we supplemented the annual staff survey with a small number of pulse surveys, providing a deeper dive into particular issues to give greater insight.

We expect the law firms we regulate to create and champion an equal and diverse culture, and we make sure we do the same. We expect our staff to consider EDI throughout their work, whatever their role, and our staff networks help to promote a culture of inclusion. We have active networks for women, race ethnicity and cultural heritage, sexual orientation and gender identity, carers and working parents, mental health and disability, and men's health and wellbeing. We also have mental health first aiders.

We promote inclusion for all staff through our EDI policy, which covers our values and behaviours, attraction and retention, reasonable adjustments and how we support the health, and wellbeing needs of our staff. We refreshed our values as part of preparing and launching our new 2023–2026 corporate strategy. We retained our commitment to inclusion in our fourth strategic priority within the corporate strategy (to be an authoritative and inclusive organisation, meeting the needs of the public, consumers, those we regulate and our staff).

Our training and other initiatives to promote career development are made available to all staff. We also track a range of employment areas throughout the employment lifecycle to make sure these opportunities are being accessed fairly by all groups.

We monitor the diversity of our staff, covering all the diversity characteristics we collect from the profession and publish an annual breakdown of the data. This includes questions about socio-economic diversity and caring responsibilities. We publish our gender pay gap data as we are required to do, and we continue to publish our ethnicity pay gap. We have an underrepresentation of Black, Asian and ethnic minority staff at senior levels in our workforce. We have published targets to double the number of people within our senior team from these backgrounds from eight to 16 per cent within five years and 20 per cent by 2032. We also have an action plan in place to address this.

We are a disability confident level 2 employer, which enables us to make the most of the opportunities provided by employing disabled people. Our activities over this reporting year to promote LGBTQ+ inclusion resulted in us being awarded a gold employer's award from Stonewall.

Work with other regulators

We work with the LSB, the oversight regulator of legal services in England and Wales, and under its rules, including the Internal Governance Rules 2019. These safeguard the independent exercise by approved regulators of their regulatory functions. We also work with the Office for Professional Body Anti Money Laundering Supervision. It supervises the professional body supervisors, such as the SRA, to make sure they are providing high standards of AML supervision. We also have significant engagement with the other eight legal sector regulators in England and Wales, as well as with regulators such as the Office of the Immigration Services Commissioner, Information Commissioner's Office and the Financial Conduct Authority. We are an associate member of the UK Regulators Network (UKRN).

Consulting on our business plan and wider consultation work

Our business plan and budget for 2024/25 were approved during the year. Both were consulted on through a multi-channel approach, using traditional media and digital channels, including a launch webinar, social media and e-newsletters. We also held direct engagement with a wide range of stakeholders through discussions and roundtables. Our aim was to raise awareness of the consultation, encourage formal written responses, while also gathering feedback through direct engagement and on specific points through social media.

The Board considered the responses to the consultation in July 2024 before making a decision on the final budget and business plan for the 2024/25 year.

The budget, alongside that of TLS, determines the level of practising fees paid by the regulated population. The Board approved the practising fee level on 18 July 2024, ahead of LSB approval.

Any significant changes to the way in which the profession is regulated or any changes which may significantly impact the profession are subject to consultation before decisions are made. During the reporting period we consulted on a number of issues:

Arrangements for Regulation Non-Authorised CILEX members
Changes to the rules on SQE exemptions
Proposals to change how the English or Welsh language proficiency of qualified lawyers is assured
Business plan and budget 2024/25
Arrangements for SRA regulation of CILEX members
Financial Penalties: further developing our framework.

All current and previous consultations are available on our website.

Members

TLS is the sole member of the company. The company is committed to successfully performing and discharging any and all functions as delegated or conferred upon the company by TLS.

Supplier relationships

To successfully manage the business, strong relationships are maintained with key suppliers. The organisation expects suppliers to conform to its code of conduct to ensure good practice across its supplier base. Regular engagement is sought from suppliers on both commercial matters and other considerations, such as:

environmental issues
EDI
innovation
building resilient partnerships with suppliers
reinforcing the importance of the organisation's commitment to high standards of behaviour, both for itself and its suppliers.

Modern slavery encompasses the offences of slavery, servitude, forced and compulsory labour and human trafficking. As the regulator of solicitors and law firms in England and Wales, we have an important role in supporting the rule of law and the administration of justice, and so we fully support the government's commitment to tackling this issue. Given the nature of our work, our main risk is our supply chain. We have in place robust procurement processes to manage this risk. We expect any supplier we work with to have suitable policies, processes, and compliance in place within their own organisation to prevent child labour, modern slavery and human trafficking. We will continue to develop this in the future, ensuring staff are aware of these risks and can easily raise any concerns.

The Board of Directors consider, both individually and collectively, that they have acted in a way they consider, in good faith, would be the most likely to promote the success of the company for the benefit of its members (having regard to the stakeholders and matters set out in section 172 (1) of the Act) in the decisions taken during the period ended 31 October 2024.

This Strategic Report was approved by order of the Board on 29 April 2025

Anna Bradley
Chair
12 May 2025

Directors' report

The directors present their report and the audited financial statements of the company for the period 1 November 2023 to 31 October 2024.

Directors

The directors during the reporting period were as follows:

		Attended	Meetings
Anna Bradley (Chair)		8	8
Ann E Harrison		8	8
Lisa Mayhew		7	8
Vikas S Shah		7	8
Elizabeth H Smart		7	8
Nicola Williams		8	8
Claire Bassett		8	8
Rob McWilliam		7	8
Paul B Loft	Until 31 December 2024	7	8
Selina Ullah	Until 31 December 2024	6	8
Claudio Pollack	From 1 January 2025	-	-
Simon Millhouse	From 1 January 2025	-	-

The SRA maintained liability insurance for its directors and officers throughout the financial year.

The Board

We had a Board of 10 directors for this reporting period, two of whom subsequently completed their terms on 31 December 2024, with two replacements appointed from 1 January 2025.

The Board Chair, Anna Bradley, was appointed for a further term of two years from 1 January 2025. Appointments and reappointments to the Board are governed by our Board composition and appointments protocol. This forms part of our governance handbook. which is available to view on our website.

All appointments to the Board, including the appointment of the Chair, are made on merit following open and fair competition, with no element of election or nomination by any particular sector or interest groups. Our Board makes appointments on advice from an appointment panel. The Nomination Committee selects appointment panel members each time a recruitment round is held.

The Board makes decisions on the reappointment of directors, taking advice from the Nominations Committee. The Committee is guided by objective annual appraisals and the desirability of ensuring a balance between regular turnover and continuity. Appointment to the post of Chair (including the selection criteria and make-up of the appointment panel) is made by the Board, advised by the appointment panel which are established by the Board on the advice of the Nomination Committee.

A proposal to reappoint an existing Chair must have Board support. The decision to reappoint the Chair, including the length of the term to be served, was recommended by the Board to a panel for ratification.

Board member remuneration was £18,000 per annum. Chairs of committees receive an additional £7,500 per annum, as does the senior independent director. The Board Chair remuneration was £105,000 per annum.

The Chair is contracted for a minimum commitment of two days per week and Board members for 20 days a year.

The performance of all Board members is considered on an annual basis through an appraisal process. This is conducted against an appraisal framework.

Board meetings

The Board held eight formal meetings during 2023/24. These included four meetings in person: two in London, one in Exeter and one in Cardiff. Board papers and minutes are published on the SRA website.

The Board has continued to hold regular workshop sessions. These provide the opportunity for engaging with external parties and more free-ranging discussion of particular issues in advance of the Executive formulating more formal proposals for the Board to consider. The Board also holds regular strategy discussions.

Board transparency

The Board maintains openness of its decision-making so that the public can see that decisions are properly made. This includes:

publication of a full accountability statement that sets out where our powers derive from, to whom we are accountable, including the public and profession, and how we discharge that accountability
publication of a Board transparency statement which describes how we share information about the Board, how it works and makes decisions, our meeting papers and what we can publish, what we cannot, and why
Board minutes and publication of papers and a Chair's blog post meetings
publication of a Board decision-making framework setting out the factors the Board considers when making its decisions.

Delegation

We have in place a Board delegation framework which sets out how the Board, Committees and Executive Team work together to discharge the SRA's functions. The Board has three committees: the Audit and Risk Committee, the Remuneration Committee and the Nomination Committee.

The Audit and Risk Committee provides assurance to the Board on matters including:

the effectiveness of systems to identify and manage risk
the effectiveness and independence of the internal and external audit processes
the effectiveness of systems of internal control
the integrity of the company's financial statements and management accounts.

The Remuneration Committee advises the Board on policies relating to the remuneration of non-executive Board Members, committee members, the Executive Team and the wider workforce.

The Nomination Committee oversees and advises the Board on matters relating to the appointment, reappointment and removal of non-executive directors and the Chief Executive and the effectiveness of the Board.

The Board delegates the day-to-day operational management of the company to the Executive Team:

Paul Philip: Chief Executive Officer
Aileen Armstrong: Executive Director – Strategy, Innovation and External Affairs
Juliet Oliver: General Counsel and Executive Director – Investigations and Enforcement
Liz Rosser: Executive Director – Operations and Resources

Paul Philip will be retiring in late 2025.

Nomination Committee Annual Report

Background

The Committee's role is to oversee and advise the Board on matters relating to the appointment, reappointment and removal of non-executive directors and the Chief Executive and the effectiveness of the Board.

The Committee's terms of reference are included in the Governance Handbook. The Committee Chair provides reports to the Board at Board meetings following each Committee meeting.

Membership

The members of Nomination Committee from November 2023 to October 2024 were:

Anna Bradley (Chair)
Ann Harrison
Paul Loft
Lisa Mayhew.

Meetings

The Committee met four times in 2023/24:

8 November 2023
26 February 2024
1 July 2024
22 August 2024.

The key issues considered at these meetings were: Executive Director succession planning, the recruitment and reappointment of Board members, recruitment of a new Board Chair and plans for the evaluation of the most recent Board effectiveness review.

The Committee has confirmed to the Board that it has carried out its responsibilities to date in line with its terms of reference.

Remuneration Committee Annual Report

Background

The Remuneration Committee's role is to advise the Board on policies relating to the remuneration of non-executive Board Members, committee members, the Executive Team and the wider workforce.

The Committee's terms of reference are included in the Governance Handbook. The Committee Chair provides reports to the Board at Board meetings following each Committee meeting.

Membership

The members of Remuneration Committee for the period November 2023 to October 2024 were:

Ann Harrison (Chair)
Nicola Williams
Liz Smart
Anna Bradley (usually in attendance)
Selina Ullah

Meetings

The Committee met three times in 2023/24:

27 February 2024
26 September 2024
22 October 2024.

The key issues considered at these meetings were: gender and ethnicity pay gap reporting; a review of staff benefits and Executive Team pay awards for 2023/24.

The Committee has confirmed to the Board that it has carried out its responsibilities to date in line with its terms of reference.

Audit and Risk Committee Annual Report

Background

The Committee's role is to provide assurance to the SRA Board on:

the effectiveness of systems to identify and manage risk
the effectiveness and independence of the internal and external audit processes
the effectiveness of systems of internal control
the integrity of the company's financial statements and management accounts.

The Committee's terms of reference are included in the Governance Handbook. The Committee Chair reports to the Board at Board meetings following each Committee meeting.

Membership

The members of Audit and Risk Committee for November 2023 to October 2024 were as follows:

Paul Loft (Chair until March 2024)
Rob McWilliam (Chair from April 2024)
Vikas Shah
Claire Bassett.

Meetings

During this period, the Committee met four times:

28 November 2023
11 March 2024
23 April 2024
9 September 2024

The key issues considered by the Committee at these meetings were: management of risk; internal controls and internal audit, including the internal control environment; and external audit and financial reporting.

The Committee has confirmed to the Board that it has carried out its responsibilities in line with its terms of reference.

Statement of corporate governance arrangements

We are not required to adopt the UK Corporate Governance Code. However, the SRA Governance Handbook requires that Board members should at all times have regard to their obligations as directors of the SRA under relevant legislation, the Articles of Association and the principles of the UK Corporate Governance Code.

Engagement with employees

As referenced within the section 172 statement in the strategic report, the staff forum and trade union represent an opportunity for employees to have their voices heard in a formal setting. We also engage with employees through consultation on significant issues such as changes to working arrangements – for example, hybrid working.

Employment of disabled people

As an organisation, we expect the law firms we regulate to create and champion an equal and diverse culture, and we do the same. We expect our staff to consider EDI throughout their work, whatever their role. Our staff networks support the promotion of equal opportunities in terms of policies, procedures, practices, recruitment and career development for employees to ensure disabled employees are treated equally. We also offer a portfolio of training to develop our staff in a fair and non-discriminatory manner. We are a disability confident level 2 employer, which enables us to make the most of the opportunities provided by employing disabled people. During the year, we made some enhancements to our Birmingham premises for the benefit of wheelchair users. We have a specific staff network to support staff with disability and mental health wellbeing.

Supplier payments

It is our policy to ensure all suppliers, when entering into contractual relationships with us, are aware of our payment terms of 30 days from date of invoice once goods or services have been delivered. It is our policy to make payments in line with this policy. We do not always manage to achieve this but have, over the course of the year, been successful in substantially improving the timeliness of our payment of suppliers. We have no business or working capital need to delay payments to suppliers and no suppliers have complained to us over the timing of our payments to them. We estimate that, on average, we took fewer than 30 days to pay our suppliers during the financial year as measured from the date of receipt of invoice.

Environmental report

We appointed Carbon Footprint Ltd, a leading carbon and energy management company, to independently assess our greenhouse gas (GHG) emissions in accordance with the UK Government's 'Environmental Reporting Guidelines: Including Streamlined Energy and Carbon Reporting Guidance'.

The GHG emissions have been assessed following the GHG Protocol and ISO 14064-1:2018 standard using 2024 emission conversion factors published by Department for Environment, Food and Rural Affairs (Defra) and the Department for Business, Energy & Industrial Strategy (BEIS). The assessment follows the location-based reporting approach for assessing scope 2 emissions from electricity usage. The financial control approach has been used.

The table below summarises the GHG emissions for the financial year. We asked our staff to use public transport where possible when travelling for business, rather than using their personal vehicles. This reduced our business travel carbon output by 15.4 tonnes (32%). Comparing the reporting year to the previous year we reduced our total energy consumption by 116,623 kWh (22%). The results in the table below demonstrate our commitment to reducing our overall emissions by 50% by 2030 and achieving net zero by 2050.

Scope	Emission Source	2023/24 tCO2e	2022/23 tCO₂e
1	Natural Gas	3.2	2.5
		3.2	2.5
2	Electricity	54.2	58.9
		54.2	58.9
3.6	Grey Fleet (employee-owned vehicles)	33.3	48.7
	Hirecars	-	1.2
		33.3	49.8
All	Total tCO₂e	90.7	111.2
	Total tCO₂e per employee (FTE)	0.1	0.1
	Total tCO₂e per £m Turnover	0.07	1.3
SECR	Total energy consumption (kWh)*	414,195	530,818

* Streamlined energy and carbon reporting (SERC) mandatory elements only (scope 1, scope 2, scope 3 grey fleet & hire cars).

The table below presents the year-on-year comparison. This shows that we have achieved a material reduction in carbon emissions through our reduction in office space.

Activity	2023/24	2022/23	% Change
Total energy consumed (kWh)	414,195	530,818	-22%
Total Gross Location-based Emissions – SECR elements only (tCO2e)	90.7	111.2	-18%
Intensity ratio: tCO2e (gross SECR mandatory elements only, location-based) per £m income	0.7	1.3	-46%
Intensity ratio: tCO2e (gross SECRmandatory elements only, location-based) per employee	0.11	0.14	-21%

Statement of directors' responsibilities

The directors are responsible for preparing the Solicitors Regulation Authority Limited group annual report and financial statements in accordance with applicable law and regulation.

Company law requires the directors to prepare financial statements for each financial year. Under that law, the directors must have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', and applicable law).

Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing the financial statements, the directors are required to:

select suitable accounting policies and then apply them consistently
state whether applicable United Kingdom Accounting Standards, comprising FRS 102, have been followed, subject to any material departures disclosed and explained in the financial statements
make judgments and estimates that are reasonable and prudent
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006.

Financial statements are published on the company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the company's website is the responsibility of the directors. The directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

Directors' confirmations

In the case of each director in office at the date the Directors' Report is approved:

so far as the director is aware, there is no relevant audit information of which the company's auditors are unaware; and
they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information.

Anna Bradley
Chair
12 May 2025

Independent auditors' report to the members of solicitors regulation authority limited

Opinion on the financial statements

In our opinion:

the financial statements give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 31 October 2024 and of the Group's surplus and the Parent Company's surplus for the year then ended;
the financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements of Solicitors Regulation Authority Limited ('the Parent Company') and its subsidiaries ('the Group') for the year ended 31 October 2024 which comprise Consolidated Income and Expenditure Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, Company Income and Expenditure Statement, Company Statement of Comprehensive Income, Company Balance Sheet, Company Statement of Changes in Equity, Consolidated Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group or Parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.

Other information

The Directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Other Companies Act 2006 reporting

In our opinion, based on the work undertaken in the course of the audit:

the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
the Parent Company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of Directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.

Responsibilities of Directors

As explained more fully in the Statement of Directors Responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group's and the Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Non-compliance with laws and regulations

Based on:

Our understanding of the Company/Group and the industry in which it operates;
Discussion with management and those charged with governance;
Obtaining and understanding of the Company's/Group's policies and procedures regarding compliance with laws and regulations; and

we considered the significant laws and regulations to be Companies Act 2006, FRS 102 the applicable accounting framework and UK tax legislation.

The Company/Group is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the amount or disclosures in the financial statements, for example through the imposition of fines or litigations. We identified such laws and regulations to be data protection and health and safety legislation.

Our procedures in respect of the above included:

Review of minutes of meeting of those charged with governance for any instances of non-compliance with laws and regulations;
Review of any relevant correspondence with tax authorities for any instances of non-compliance with laws and regulations;
Review of financial statement disclosures and agreeing to supporting documentation;
Involvement of tax specialists in the audit.

Fraud

We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included:

Enquiry with management and those charged with governance regarding any known or suspected instances of fraud;
Obtaining an understanding of the Company's/Group's policies and procedures relating to:

Detecting and responding to the risks of fraud; and
Internal controls established to mitigate risks related to fraud.

Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud;
Discussion amongst the engagement team as to how and where fraud might occur in the financial statements;
Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;

Based on our risk assessment, we considered the areas most susceptible to fraud to be posting inappropriate journal entries to manipulate financial results and management bias in accounting estimates.

Our procedures in respect of the above included:

Testing a sample of journal entries throughout the year, which met a defined risk criteria, by agreeing to supporting documentation;
Assessing significant estimates made by management for bias including the cost allocation methodology used to calculate the recharge of costs to SRA Compensation Fund and the valuation and assumptions used in the calculation of significant provisions which included the interventions, disciplinary proceedings and litigation provision and claims provision; and

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council's website.

This report is made solely to the Parent Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the 4Parent Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Kyla Bellingall (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Birmingham, UK

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).