What Should a COFA Monthly Checklist Include for UK Law Firms?

The role of the Compliance Officer for Finance and Administration (COFA) is one of the most demanding positions in any SRA-regulated law firm. You are responsible for ensuring the firm complies with the SRA Accounts Rules, the SRA Principles, and the Money Laundering Regulations. A single oversight can lead to a regulatory penalty, a rebuke, or worse, a referral to the Solicitors Disciplinary Tribunal.

Yet many COFAs, particularly those in smaller firms or sole practices, juggle this role alongside fee-earning work. Without a structured approach, it is easy to miss a deadline or overlook a red flag in the client account. A monthly checklist is not just a good idea. It is a necessity for managing your COFA duties effectively and maintaining a clear audit trail.

This guide sets out a practical, month-by-month checklist tailored for UK solicitors and law firms. It covers the core tasks you should complete every month, from client account reconciliations to reviewing your firm's reconciliation calendar. Use it as a template and adapt it to your firm's specific structure and risk profile.

Why a Monthly Checklist Matters for COFA Duties

The SRA Accounts Rules require firms to reconcile client account balances at least every five weeks. That is the regulatory minimum. In practice, a monthly reconciliation is far safer and more manageable. It allows you to spot discrepancies early, before they compound into a breach that requires reporting to the SRA.

Beyond reconciliations, the COFA must monitor a range of other compliance areas. These include the firm's professional indemnity insurance (PII) renewal dates, the status of any undertakings given, and the firm's compliance with the Money Laundering Regulations. A monthly checklist ensures you do not rely on memory or ad-hoc checks.

For firms that hold client money, the COFA is the designated person responsible for the firm's compliance with the SRA Accounts Rules. If the firm breaches those rules, the COFA must report it to the SRA promptly. A consistent monthly process reduces the risk of a breach going unnoticed.

The Core Monthly Checklist for COFAs

The following tasks should form the backbone of your monthly compliance routine. They are ordered by priority and frequency.

1. Client Account Bank Reconciliation

This is the single most important task. Each month, you must reconcile the client account bank statement against the client ledger balances. The total of all client ledger balances should equal the balance on the client bank account, after adjusting for any unpresented cheques or deposits in transit.

If you use accounting software such as Practice Manager, P4W, or Actionstep, the reconciliation process is usually automated. But you must still verify the output manually. Check for any unidentified credits, old unpresented cheques, or transactions that do not match a client matter.

Document the reconciliation. Keep a signed and dated copy of the reconciliation report. The SRA may ask to see these records during a routine inspection or if a complaint arises.

Practical tip: Set a fixed date each month for the reconciliation, for example the 10th working day after the month end. Add it to your firm's reconciliation calendar and share it with the COLP and the practice manager.

2. Office Account Bank Reconciliation

While the SRA Accounts Rules focus on client money, the office account also needs regular reconciliation. This is not a regulatory requirement, but it is good practice. It helps you monitor the firm's cash flow, identify any errors in transfers between accounts, and ensure that office account transactions are properly recorded.

If the firm uses a pooled client account, you must also check that no client money has been inadvertently held in the office account. This can happen if a client pays a bill directly into the office account before the bill is raised. Any such funds must be transferred to the client account promptly.

3. Review of Client Ledger Balances

Beyond the reconciliation itself, you should review the client ledger balances for any anomalies. Look for:

• Credit balances that have been held for more than six months without any activity. These may need to be returned to the client or, if unclaimed, dealt with under the firm's residual balance policy.
• Debit balances on the client account. These are a breach of the SRA Accounts Rules unless they result from a bank error or a timing difference that is resolved within five working days.
• Large balances that appear disproportionate to the matter. This could indicate that the firm is holding client money unnecessarily, which may be a breach of the "proper purpose" rule.

If you identify any debit balances, report them to the COLP immediately. You must also consider whether the breach is material enough to require a report to the SRA.

4. Undertakings Register Review

Many law firms give undertakings as part of conveyancing, litigation, or corporate transactions. Each undertaking is a binding promise that the firm must honour. If the firm fails to comply with an undertaking, it can face serious regulatory consequences.

Each month, review the firm's undertakings register. Check that all undertakings have been fulfilled or are on track to be fulfilled within the agreed timeframe. If an undertaking is about to expire, contact the relevant fee-earner to confirm the position.

For conveyancing firms, this is particularly important. Undertakings to discharge a mortgage or to send a redemption statement must be completed promptly. A missed undertaking can delay a transaction and expose the firm to a negligence claim.

5. Compliance with the Money Laundering Regulations

The Money Laundering Regulations 2017 require law firms to carry out customer due diligence (CDD) on all new clients, and to maintain a risk assessment. The COFA is not always the person responsible for CDD, but you should monitor the firm's compliance each month.

Check that the firm's CDD records are up to date. Are there any files where the client's identity has not been verified? Are there any high-risk clients where enhanced due diligence (EDD) is required but has not been completed?

Also review the firm's suspicious activity report (SAR) log. If any fee-earners have made internal SARs, ensure they have been reported to the National Crime Agency (NCA) where required.

6. Professional Indemnity Insurance (PII) Renewal Status

PII renewal is an annual event, but the COFA should monitor it monthly in the run-up to the renewal date. Check that the firm's current policy is still in force and that there are no gaps in cover. If the firm has changed insurer, ensure the new policy meets the SRA's Minimum Terms and Conditions (MTC).

For firms that have merged or acquired another practice, check that the PII cover extends to the acquired work. The SRA requires run-off cover for ceased practices, so if the firm has closed a department or office, confirm that the appropriate cover is in place.

7. SRA Reporting Obligations

The COFA must report certain matters to the SRA. These include:

• Any serious breach of the SRA Accounts Rules.
• Any failure to comply with the SRA Principles.
• Any material change to the firm's structure, such as a change in ownership or the appointment of a new COLP or COFA.

Each month, review whether any reportable events have occurred. If you are unsure whether a matter is reportable, err on the side of caution and seek advice from a compliance specialist or your firm's COLP. The SRA's guidance on reporting is clear: it is better to report a potential breach than to risk a later finding of non-disclosure.

Keep a log of all reports made to the SRA, including the date, the nature of the report, and the outcome. This log will be invaluable if the SRA conducts a thematic review or a routine inspection.

Building a Reconciliation Calendar

A reconciliation calendar is a simple but powerful tool. It sets out the dates on which each monthly task must be completed, and who is responsible for it. For example:

• 5th working day of the month: Client account reconciliation completed by the accounts team.
• 7th working day: Reconciliation reviewed and signed off by the COFA.
• 10th working day: Undertakings register reviewed by the COFA.
• 15th working day: Money laundering compliance check completed by the COLP.

Share the calendar with the COLP and the practice manager. If you are the sole COFA in a small firm, set reminders in your diary or use project management software such as Trello or Asana. The key is to make the process routine, not reactive.

For firms that hold significant client money, consider a weekly mini-reconciliation. This can be as simple as checking the client account balance against the ledger totals each Friday. It reduces the risk of a large discrepancy building up over a month.

Common Pitfalls and How to Avoid Them

Even with a checklist, COFAs can fall into traps. Here are the most common ones and how to avoid them.

Pitfall 1: Relying on memory. Do not assume that because nothing went wrong last month, nothing will go wrong this month. Use the checklist every month, without exception.

Pitfall 2: Ignoring small discrepancies. A difference of £5 on the client account might seem trivial. But if it is not investigated, it could indicate a systemic error in the accounting system. Investigate every discrepancy, no matter how small.

Pitfall 3: Failing to document. The SRA expects to see a clear audit trail. If you cannot produce signed reconciliation reports and a log of your monthly checks, the SRA may assume the checks were not done. Document everything.

Pitfall 4: Delegating without oversight. It is fine to delegate the reconciliation to an accounts assistant. But the COFA must still review and sign off the work. You cannot delegate your regulatory responsibility.

When to Seek External Support

If your firm's compliance burden is growing, or if you are struggling to keep up with the monthly checklist, consider engaging external support. A solicitor accountant who specialises in SRA compliance can review your processes, help you design a reconciliation calendar, and provide a second pair of eyes on your client account reconciliations.

We offer COFA compliance support for UK law firms, including monthly compliance reviews and SRA reporting assistance. Our team understands the specific challenges faced by COFAs in solicitors' practices.

For a deeper dive into the SRA Accounts Rules, see our SRA Accounts Rules essentials guide. If you are considering a change in firm structure, our partnership vs LLP guide for solicitors may be useful.

Conclusion

A monthly checklist is the foundation of effective COFA duties. It ensures you meet your regulatory obligations, reduces the risk of a breach, and provides a clear audit trail for the SRA. Start with the core tasks: client account reconciliation, office account reconciliation, ledger review, undertakings register, money laundering compliance, PII monitoring, and SRA reporting.

Build a reconciliation calendar that works for your firm. Document every check. And if you need help, do not hesitate to seek it. The cost of a compliance failure far outweighs the cost of getting it right.

If you would like a free health check of your firm's compliance processes, book a call with our team. We can review your current checklist and suggest improvements tailored to your practice.