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Legal Update - Countdown to COFA

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19 December 2012

The SRA has announced that they have finally begun approving the appointment of the new COLPs and COFAs.  Although most practices should have had their confirmation by now, there is a chance that not all practices will hear from the SRA before the new roles come into effect on 1 January 2013.  If this is the case, the SRA has advised that practices should take the view that “no news is good news”, and assume that their nominations will be accepted.

In addition to processing the remaining nominations, the SRA is also dealing with a number of practices that have either still not nominated their new Compliance Officers, have nominated individuals that will not pass the Suitability Test or, perhaps even more worryingly, have nominated individuals without declaring that they have suitability issues.

With only a couple of weeks until the new roles go live, we thought it might be helpful to provide some last minute tips on what you should do before 1 January 2013.  Here is our Top 10:

1. Ensure that your monthly client account reconciliations are prepared in a suitable format, and that all accounts have been reconciled correctly.  Remember that the reconciliations need to be three-way (bank account, client ledgers and cashbook).
 
2. Similarly, the office account should be correctly reconciled every month.

3. Ensure that any old unpresented cheques on the client and office account reconciliations have been cancelled, investigated and reissued as appropriate.

4. Produce and review a report of any office ledger credit balances, to spot any instances of client money being held on office account.  Pretty much every accounts package has a standard report for this.

5. Produce and review a report of any overdrawn client ledger balances.  Again, this is a standard report on most software.

6. Check for any ledgers where there are balances on both office and client ledgers, to identify any breaches of the 14-day rule.

7. Check for any suspense ledgers, and ensure that any balances are cleared quickly.

8. Look for any ledgers with old residual balances, and get fee earners to deal with them correctly.  Do not be tempted to sweep them up.

9. Revisit the breaches raised by your Reporting Accountants in previous years, and ensure that you have addressed them all.  It would not look good if the SRA found that you had been told about a controls weakness some time ago, but had failed to act on it.

10. Finally, ensure that your Breaches Register is ready to go.  Remember that you will need to prepare a filenote for each breach, explaining exactly what has happened, when it happened, the amounts involved, what has been done about it, and what you have done to make sure it doesn’t happen again.  We can provide you with a template Breaches Register if you need one.

We would also suggest that all of the items on this list are carried out on a regular basis, as this will help to ensure compliance with the SRA Accounts Rules.  There are of course lots of other things that COFAs need to do, such as file reviews and attending Finance meetings, but all of the above are fairly quick and easy, and a good place to start.

Good luck!

LMS Quarterly Benchmarking Survey

Finally, just a quick reminder about the quarterly survey that we introduced earlier this year. 

The survey provides practices with a regular update on key financial indicators and trends within the legal profession.  It also looks at practices’ views and actions as a result of the many changes going on in the profession at present, together with feedback on other important topics, such as professional indemnity insurance renewals and tax payments / funding.

The questionnaire for the quarterly survey is very short, and is quick and easy to complete using Excel.  The results are emailed to participants within six weeks of each quarter end.

If you would like to take part, please email us at benchmarking@hazlewoods.co.uk, or you can download a copy of the questionnaire at www.lawmanagementsection.org.uk


 

 

Andy Harris - Associate Partner
Andy Harris
Associate Partner Contact details