Following a furore over plans to water down the rules for accountants’ reports on law firms’ financial accounts and safeguards for client monies, the Solicitors Regulation Authority (SRA) has launched a second consultation on accountants" reports, which will be open until 28 January 2015 say Harris & Co chartered accountants Northampton
This next phase consultation looks at redefining the circumstances in which accountants" reports are qualified and amendments to the format of the reports. It also considers which areas pose a low risk to clients" funds and could be excluded from future reporting requirements.
This follows an initial consultation on the subject which closed in September and was met with criticism as it removed perceived safeguards particularly around client monies.
The SRA has already made some changes to accountants" reports as part of its regulatory reform programme. As a result law firms now only have to deliver a report to us if it is qualified, while firms that receive 100% of their fees from Legal Aid work do not need to obtain a report.
Annette Lovell, director of regulatory policy, said:
‘The underlying purpose of obtaining accountant’s reports is to ensure client monies are properly protected.’
‘We are proposing that the rules are changed to give greater importance to the professional judgment of the reporting accountant in identifying significant risks to the proper handling of clients’ funds.’
‘This was something raised in our first consultation and we revisit this issue in the new consultation.’
The SRA will also review the design of the current form which should make it easier for accountants to decide what checks and tests they need to confirm to ensure that client monies are safe.
‘We are also seeking views about whether some firms - only those presenting a low risk to client monies - should be required to obtain a report at all,’ added Lovell. ‘We welcome views from all those who will be affected by these proposals.’