How to Prepare for an SRA Accountant's Report: A Solicitor's Step-by-Step Guide

If your firm has held client money during the accounting period, you must obtain an accountant's report and file it with the SRA within six months of the period end. The report confirms whether the firm complied with the SRA Accounts Rules. This guide is about one thing: how to prepare for that report so it goes smoothly and comes back unqualified. It covers the records to assemble, how to choose and instruct the reporting accountant, the timeline to work to, exactly what the accountant tests, and how to fix problems before the visit rather than have them written up afterwards.

Two related questions sit alongside preparation. Whether your firm needs a report at all (the trigger), and whether you qualify for the narrow exemption, are covered in detail on separate pages so this guide can stay focused on the workflow. If you are not yet sure a report applies to you, read when an SRA accountant's report is required and whether you qualify for the exemption first. The short version: a firm that held client money in the period needs a report unless it held only Legal Aid Agency money, or its client money stayed within an average of £10,000 and a maximum of £250,000 across the period. Most conveyancing, litigation and private client firms will not qualify, so the rest of this guide assumes a report applies to you.

Step 1: Assemble the Records the Accountant Will Need

Preparation is mostly about having the right records ready as a single, complete evidence pack. A reporting accountant who has to chase missing documents takes longer and is more likely to flag gaps. Assemble the following before you instruct anyone:

• Client account bank statements covering the entire accounting period.
• Business account bank statements (the accountant checks these for any client money that landed in the wrong account).
• Client ledger reports showing every transaction on every matter for the period.
• Your reconciliations for each five-week period (or each month), each one signed and dated by the person who performed it and the COFA or manager who reviewed it.
• A list of every client matter open at the period end, with its balance.
• Evidence of bill delivery before each transfer from client to business account.
• A sample of matter files with the bills and receipts attached.
• The COFA's compliance record for the period, including the firm's policies and any reviews of compliance with the Accounts Rules.

If you use practice management software, most of this can be exported in minutes. If you reconcile on spreadsheets, keep a signed and dated copy of each reconciliation as you go, because reconstructing them at year end is exactly the kind of gap an accountant notices. The SRA expects a clear audit trail: who performed each reconciliation, who reviewed it, and when.

Step 2: Choose and Instruct the Reporting Accountant

You cannot sign your own report. It must be completed by a reporting accountant who is both independent of the firm and a member of a recognised supervisory body, that is, one of the chartered accountancy bodies such as ICAEW, ACCA or ICAS. Independence means the accountant who forms the opinion is not the same person who keeps the firm's books or runs its compliance, so the opinion is genuinely external.

When choosing an accountant, the practical differentiator is whether they work regularly with SRA-regulated firms. A general practice accountant who rarely sees the Accounts Rules will spend longer learning your systems and is less able to tell you, in advance, where the risk sits. An accountant who tests law firm client accounts every month knows what good looks like and can give you a useful steer before any visit.

Instruct early. Agree the scope, the period covered, the format the accountant wants the evidence pack in, and the visit or remote review date well before the period end. Confirm how they will access your records and who at the firm will be their point of contact. The earlier the instruction, the more chance you have to act on anything they spot.

Step 3: Work to a Year-Round Timeline

The report is filed after the period end, but preparation is not an end-of-year task. The cleanest reports come from firms that get the controls right all year and simply collate the evidence at the end. Reconcile at least every five weeks, clear residual balances as matters close, and never let client money sit in the business account.

A practical timeline looks like this:

• Three months before the period end. Review every open client matter. Identify residual balances and stale transactions. Contact clients about funds that should be returned.
• Two months before the period end. Run a full reconciliation of all client accounts. Investigate and resolve any discrepancy before it ages further.
• One month before the period end. Build the evidence pack. Review the COFA's compliance record. Run a self-review (a mock test) on a sample of matters using the checks in Step 4.
• After the period end. Complete the final reconciliation and hand the evidence pack to the reporting accountant.

The filing deadline is fixed: six months from the accounting reference date. If your period ends on 30 April, the report is due by 31 October. Late filing is a breach and can be referred to the SRA's enforcement team, so the timeline above is built to leave room, not to run to the wire.

Step 4: Know What the Accountant Tests

You prepare far better when you know what is being checked. The reporting accountant works at two levels: the firm's controls, then a sample of individual matters.

At the controls level, the accountant confirms that client money was kept separate from the firm's own money, that reconciliations were carried out at least every five weeks under Rule 8.3 and signed off by the COFA or a manager, and that withdrawals from client account were authorised and only made when properly due. The reconciliation work usually decides the tone of the whole report: a firm whose client account balance ties cleanly to the total of its client ledgers, and whose individual ledgers tie to the bank, starts from a strong position.

At the matter level, the accountant selects a sample, typically running across the firm's range of work, and for each matter checks:

• That client money was paid into the client account promptly.
• That money left the client account only when it was properly due.
• That a bill was delivered before any transfer from client to business account.
• That residual balances were dealt with correctly when the matter closed.

If the sample is clean, the testing stops there. If it shows errors, the accountant may widen the sample, and systemic errors lead to a qualified report. Knowing this, your self-review in the final month should mirror these exact checks.

Step 5: Fix Issues Before the Visit, Not After

The point of preparing is to find and fix problems while they are still your problem to fix, before they become a finding in the report. The issues that most often surface in preparation are:

Reconciliations that do not tie at both levels. Some firms reconcile the client account bank balance to the total of client ledger balances but never check individual client balances against the bank. Both levels matter, and a mismatch at either is the most common point of failure. Resolve every discrepancy before the period end.

Client money in the business account. This is common in conveyancing, where a client pays a deposit by transfer and it lands in the business account by mistake. Client money must be held in a client account. If it has happened, move it to the client account at once and document the correction.

Transfers made without a bill delivered first. Money may only move from client to business account once a bill has been delivered. A transfer ahead of the bill is a frequent finding; check the sequence on every matter in your self-review.

Residual balances left on closed matters. When a matter closes, any remaining client money must be returned to the client or dealt with under the SRA's guidance. Small balances left for years are a recurring compliance issue, so clear them as part of the three-month review.

Weak evidence of COFA oversight. The COFA must be able to show active oversight of compliance during the period, not just at year end. If that record is thin, build it up before the accountant arrives.

Fix what you find, document the correction, and keep the evidence. A corrected error that you can show you identified and resolved is in a different category from an open breach the accountant uncovers.

How to Secure an Unqualified Report

An unqualified report means the accountant found no material breach of the Accounts Rules. A qualified report means they identified one or more, and the SRA reviews every qualified report and may act on it depending on the severity and pattern of the breaches. A qualification is not an automatic sanction, but it does invite scrutiny.

You earn an unqualified report through the controls, not the presentation. Reconcile on time and at both levels, keep client money out of the business account, deliver a bill before every transfer, and clear residual balances as matters close. Then collate the evidence pack so the accountant can test quickly and find nothing material.

If you know there is a breach, do not try to keep it from the accountant. The reporting accountant has a duty to report material breaches to the SRA regardless of what the firm says, so concealment achieves nothing and damages credibility. Transparency, plus clear evidence that you have already taken corrective action, is the stronger position.

How a Specialist Solicitor Accountant Can Help

Preparing for the report is a specialised task, and a general practice accountant may not understand the specific demands of the SRA Accounts Rules. A solicitor accountant who works regularly with law firms knows exactly what the reporting accountant tests and can help you build the evidence pack efficiently and run a realistic self-review before the visit.

For firms that want guidance throughout the year rather than only at the period end, we offer COFA compliance support. Regular reviews keep the controls in good order, so there are no surprises when the reporting accountant arrives. If you are preparing for your first report as a new firm or a new COFA, our SRA Accounts Rules essentials guide covers the fundamentals.

Final Preparation Checklist

Run through this in the weeks before the reporting accountant's review:

• Complete every client account reconciliation for the period and resolve all discrepancies.
• Check that reconciliations tie at both levels: individual ledgers to the bank, and the client account total to the sum of all client ledgers.
• Review every open matter for residual balances and clear them.
• Confirm a bill was delivered before each client-to-business transfer.
• Confirm any client money that reached the business account has been corrected and documented.
• Build the evidence pack: bank statements, ledgers, signed reconciliations, bills and the open-matter list.
• Review and strengthen the COFA compliance record.
• Run a self-review on a sample of matters using the accountant's own tests.
• Confirm the reporting accountant's date and how they will access your records.

The accountant's report is a regulatory requirement, but it is also a useful health check. A clean, unqualified report confirms your systems and controls are working. A qualified report points to weaknesses that need attention. Either way, the process is manageable when you prepare year-round and collate the evidence properly.

If you would like help preparing for your SRA accountant's report, contact our team of specialist solicitor accountants. We work with law firms across England and Wales and can help you get the evidence pack right and the controls clean before the report is signed.