Are you ready for the SRA rules changes?

SRA Accounts Rules 2011

It is now almost a year since the SRA relaxed the requirements to submit an Accountant’s Report for those firms having an unqualified report. At the same time those firms holding or receiving client money solely from the Legal Aid Agency were exempted from obtaining an Accountant’s Report.

With effect from 1 November 2015 the Rules are to change again which should see even fewer Accountant’s Reports submitted to the SRA. The new rules stipulate that Reports should only be qualified if:

  • the breaches identified are material and likely to put client money at risk.

Previously the SRA were keen to see all breaches included on the Report to allow them to identify any significant matters warranting further review. The new Rules now place more emphasis on the professional judgement of the Reporting Accountant to determine what is material in the context of each individual firm. As a guide material breaches are likely to be those that:

  • arise as a result of an intention to break the Rules; and / or
  • arise as a result of a significant weakness or breakdown in the firm’s systems and controls designed to prevent breaches.

This does not necessarily mean that breaches from administrative errors will not be material but means that any breaches identified must be looked at both individually and collectively when making the decision to qualify the Report.

The new Rules could also exempt more firms from the requirement to submit an Accountant’s Report. If your firm holds client money averaging less than or equal to £10,000 and a maximum of less than or equal to £250,000 in the reporting period then you will be exempt from the requirement to obtain an Accountant’s Report.

The new Rules come into force on 1 November 2015 and will apply to accounting periods ending on or after that date and therefore the first accounting periods caught under the new Rules are likely to be those ending 30 November 2015.

We will of course discuss the new Rules and the impact on your Accountant’s Report with you at our annual accounts meeting with clients but if you would like to discuss this earlier please contact Mike Kirsopp on 01228 530913 or e-mail  mike@doddaccountants.co.uk.

If you are not a Dodd & Co client but would still like to discuss the impact of the new Rules on your Accountant’s Report please contact Mike Kirsopp. 

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