Law firms are entrusted with handling significant amounts of client money, often holding funds on behalf of clients for property transactions, litigation matters, probate cases and other legal services. To protect those funds and maintain public confidence in the legal profession, firms must comply with the Solicitors Accounts Rules (SARs).

For many law firms, this includes the requirement for an independent accountant’s review and report. Understanding these requirements is essential to ensuring compliance and avoiding regulatory issues.

What Are the Solicitors Accounts Rules?

The Solicitors Accounts Rules are regulations issued by the Solicitors Regulation Authority (SRA) that govern how solicitors manage and safeguard client money.

The rules are designed to ensure that client funds are:

  • Kept separate from the firm’s own money.
  • Properly accounted for and recorded.
  • Protected from misuse or loss.
  • Available to clients when required.

Failure to comply with the rules can result in regulatory action, reputational damage and, in serious cases, disciplinary proceedings.

What Is a Solicitors Accounts Rules Audit?

A Solicitors Accounts Rules audit is an independent examination of a law firm’s compliance with the SRA Accounts Rules.

The appointed reporting accountant will review the firm’s systems, procedures and accounting records relating to client money. The purpose is to identify whether any breaches of the rules have occurred and whether those breaches are considered material.

Following the review, an Accountant’s Report may be submitted to the SRA if material breaches are identified.

Which Firms Need an Audit?

Rule 12.1 of the SRA Accounts Rules requires firms that hold or receive client money to obtain an accountant’s report within 6 months of the end of the accounting period to which the report relates.

There are exemptions from the requirement to obtain an Accountants’ Report if either of the following is met within a single accounting period:

  • The average balance on the client account does not exceed £10,000 and the maximum balance at any point throughout the year does not exceed £250,000.
  • All client received and held is from the Legal Aid Agency

What Does the Audit Involve?

While every firm is different, a typical review will include:

  • Examination of client account reconciliations.
  • Testing of client ledger balances.
  • Review of transfers between client and office accounts.
  • Assessment of procedures for handling client funds.
  • Review of residual balances and dormant client monies.
  • Consideration of compliance with key SRA Accounts Rules.

The accountant will also discuss any weaknesses identified and recommend improvements to strengthen internal controls.

How Cube Partners Can Help

Our experienced audit team works closely with legal practices to provide efficient and practical Solicitors Accounts Rules audits. We focus on understanding your firm’s processes, identifying areas of risk and providing clear recommendations that help strengthen compliance.

By taking a constructive approach, we aim to make the review process straightforward while helping your firm meet its regulatory obligations with confidence.

Don’t view a Solicitors Accounts Rules audit purely as a compliance exercise. A well-executed review can identify process improvements, strengthen internal controls and reduce the risk of future regulatory issues.