How Often Must a Solicitor Reconcile the Client Account? The Five-Week Rule (Rule 8.3)

The Five-Week Rule in One Line

Under Rule 8.3 of the SRA Accounts Rules 2019 (in force from 25 November 2019), an SRA-regulated firm must obtain a statement for each client account from the bank or building society and reconcile, at least once every five weeks, three figures: the bank or building society statement balance, the cash book balance and the client ledger total. The reconciliation must be signed off by the COFA or a manager of the firm. That is the whole rule, and the rest of this article is about doing it properly.

Two details trip firms up more than any other. The first is that the interval is five weeks, not a calendar month. The second is that it is a three-way reconciliation, not a bank-to-cash-book check. Miss either and the firm is non-compliant even if no client money has been lost.

What a Three-Way Reconciliation Actually Compares

Rule 8.3 names three figures, and the point of the reconciliation is to prove that all three agree. Each one answers a different question:

• The bank or building society statement balance. This is the money the bank says is in the client account on the statement date. It is the external, independent figure, the one the firm does not control.
• The cash book balance. This is the running total in the firm's own client cash book, the record of every receipt and payment the firm has posted. It answers "what do our books say the account holds?"
• The client ledger total. This is the sum of every individual client's ledger balance, client by client and matter by matter. It answers the question that matters most to the regulator: "how much do we owe to clients, in total?"

The discipline of the three-way check is that it ties the outside world (the bank) to the inside record (the cash book) and then to the obligation (the client ledgers). If the bank balance and the cash book agree but the client ledger total is higher, the firm is holding less money than it owes clients. That is a shortfall, and a shortfall must be corrected from the firm's own money straight away. A two-way reconciliation of bank against cash book would never have revealed it, because both of those figures can be internally consistent while the ledgers tell a different story.

Where the three figures do not agree, every difference is listed as a reconciling item on the reconciliation statement and explained. Genuine reconciling items include uncleared cheques, deposits in transit, bank charges or interest the bank has applied but the firm has not yet posted, and timing differences on transfers. An unexplained difference is not a reconciling item. It is a red flag, and it has to be investigated before the reconciliation can be signed off.

Why Five Weeks, and Why a Calendar Month Is a Trap

Client money belongs to clients, not to the firm, and it often moves in large sums through conveyancing, probate and litigation matters. The five-week ceiling exists so that any error, misposting or shortfall is caught within a maximum of 35 days rather than festering for a quarter. It is a control designed to surface problems while they are still small.

The common mistake is to read "every five weeks" as "monthly" and to reconcile on a fixed calendar date such as the last working day of each month. The arithmetic does not cooperate. Five weeks is 35 days, and the gap between two month-end dates is regularly 30 or 31 days, but it does not take much for a month-end cadence to drift past 35 days: a long month, a date that lands on a weekend or bank holiday, a delayed bank statement, a reconciler on leave. The moment the gap from one signed reconciliation to the next exceeds five weeks, the firm has breached Rule 8.3, even if it reconciled "monthly" all year.

The practical fix is to stop thinking in calendar months. Set a fixed four-week internal cadence, or reconcile on the same weekday each cycle, so the gap is structurally incapable of reaching 35 days. A four-week rhythm gives roughly a one-week buffer for the inevitable slippage when a statement is late or the usual reconciler is away. Treat five weeks as the line you must never cross, and run the process comfortably inside it. High-volume practices, particularly busy conveyancing teams, reconcile weekly or even daily, because money is flowing constantly and the firm wants errors surfaced the same week they occur. The five-week rule is the floor, not the standard to aim for.

Multiple Client Accounts and Designated Deposit Accounts

Rule 8.3 applies to each client account the firm operates, not to "client money" as a single undifferentiated pool. A firm may run a general client account and, alongside it, one or more designated client deposit accounts: separate accounts opened for a single client or matter, often so that a substantial sum (a held deposit, an estate balance, retained funds) earns interest for that client. Each of those accounts gets its own bank statement, and each is reconciled in its own right against the client ledger entries that relate to it.

The figures then roll up so the firm can demonstrate that the entire client position agrees: total of all client account bank balances, total cash book, total of all client ledgers. What you cannot do is net one account against another. If the general client account shows a surplus and a designated account shows a shortfall, the firm has a shortfall on that designated account, full stop. The reconciliation has to stand up account by account and client ledger by client ledger. An inspector who sees a single consolidated figure with no underlying per-account workings will ask to see them, and the absence of that breakdown is itself a finding.

Sign-Off: the COFA or a Manager

Rule 8.3 does not leave the sign-off to whoever happens to do the bookkeeping. The reconciliation must be signed off by the COFA (Compliance Officer for Finance and Administration) or a manager of the firm. The intent is a genuine second look by someone with authority and accountability for the firm's client money.

Good practice, and strong evidence if the SRA ever inspects, is to keep preparation and approval separate. The person who prepares the reconciliation (often a cashier or bookkeeper) is not the only person who approves it. The COFA or a manager reviews the statement, challenges the reconciling items, satisfies themselves that any difference is explained and that there is no shortfall, and then signs and dates it. A sign-off that is a reflexive signature on an unread schedule adds nothing; a sign-off that involves real scrutiny is exactly what the rule is for. The COFA carries primary responsibility for the firm's compliance with the Accounts Rules, and a COFA who waves through late or incomplete reconciliations is personally exposed.

What an SRA Inspector Looks at First

When the SRA reviews a firm's client account, the reconciliation file is one of the first things examined, because it shows at a glance whether the firm has its client money under control. An inspector typically checks:

• Frequency. Are the reconciliations dated no more than five weeks apart, with no gaps, across the whole period? They will look for the cycle that quietly slipped past 35 days.
• That it is genuinely three-way. Does each reconciliation tie the bank statement, the cash book and the client ledger total together, or does it only compare bank to cash book? A missing client ledger total is a standard finding.
• Sign-off. Is each reconciliation signed and dated by the COFA or a manager, and is the preparer different from the approver?
• Reconciling items. Are differences explained, and crucially, are they cleared? An item such as an uncleared cheque that reappears month after month suggests it was never real, or that something is wrong.
• Shortfalls and how they were handled. Where the client ledger total exceeded the cash held, was the shortfall corrected promptly from the firm's own money, and was it reported as a breach where it was serious?
• Per-account workings. For firms with designated deposit accounts, is each account reconciled separately, with the underlying ledgers available?

The Reconciliation Breaches We See Most Often

In practice the same handful of failures come up again and again, and every one of them is avoidable:

• Drifting past five weeks. A month-end cadence that slips over 35 days, usually because of leave, a late statement, or a long month. The clock does not pause for annual leave, so a trained backup reconciler is essential.
• The two-way reconciliation. Comparing the bank statement to the cash book but never to the client ledger total. The figures look reconciled, but a shortfall against the ledgers would be invisible.
• Unexplained or rolling reconciling items. Differences carried forward period after period without ever being resolved. A reconciling item is a temporary explanation, not a permanent parking space.
• No real sign-off. No COFA or manager signature, or a signature applied without scrutiny, or the same person preparing and approving.
• Netting between accounts. Offsetting a surplus on one client account against a shortfall on another, instead of treating and correcting the shortfall on its own account.
• A broken audit trail. Reconciliations not retained, kept out of order, or held only in an editable spreadsheet with no fixed record. They must be available for at least six years and should be tamper-evident.

A recurring theme: the underlying records have to be accurate for the reconciliation to mean anything. If transactions are not posted promptly to the correct client ledgers, the client ledger total is wrong, and a reconciliation against a wrong figure proves nothing. Post promptly, reconcile on a fixed sub-five-week rhythm, and have the COFA or a manager genuinely review and sign.

How This Sits Alongside the Annual Accountant's Report

The five-week reconciliation is a continuous, in-house control. It is separate from the annual accountant's report, which a firm that has held client money in the period must obtain from a reporting accountant after the period end. The two connect at inspection time: when the reporting accountant tests the firm's compliance, the reconciliation file is one of the first things they sample, and missed or weak reconciliations during the year will be reflected in the report.

There is a narrow exemption from obtaining the accountant's report. A firm is exempt only if all the client money held in the period did not exceed an average of £10,000 and a maximum of £250,000 (or the only client money it held was money received from the Legal Aid Agency). That exemption removes the duty to commission an external report; it does not remove the duty to reconcile every five weeks. An exempt firm that holds any client money must still run the three-way reconciliation on the five-week cycle. For the detail of those thresholds and how to monitor them, see our guide on the SRA accountant's report exemption thresholds.

A Compliant Reconciliation Routine

Putting it together, a routine that keeps a firm comfortably on the right side of Rule 8.3 looks like this:

• Reconcile on a fixed four-week cadence (or weekly in a high-volume practice), never on a drifting calendar-month date, so the gap can never reach five weeks.
• Run a genuine three-way reconciliation: bank or building society statement balance, cash book balance, and total of all individual client ledgers, for each client account and designated deposit account.
• List and explain every reconciling item, and clear stale ones rather than rolling them forward.
• Investigate any difference before sign-off, and correct any shortfall from the firm's own money immediately, reporting it as a breach where it is serious.
• Have the COFA or a manager review and sign and date the reconciliation, with the preparer and approver being different people.
• Train a backup reconciler so leave or absence never causes a missed cycle.
• Retain every signed reconciliation, in date order, with the underlying ledgers and statements, for at least six years, in a tamper-evident form.

How We Can Help

At Accounts for Lawyers, we work with UK law firms on SRA Accounts Rules compliance, including designing and reviewing reconciliation procedures that meet Rule 8.3. We help firms move off a fragile calendar-month cycle onto a robust sub-five-week rhythm, set up a proper three-way reconciliation template, and prepare for SRA inspection. If you are not sure your current process would survive a review, our free firm health check includes a look at your reconciliation cycle and sign-off.

We also provide COFA compliance support for firms that want an experienced compliance partner alongside the COFA. Our team includes former COFAs and legal-sector accountants who understand the day-to-day reality of running client money.

The requirement is the same whatever the structure: a sole practitioner, a partnership, an LLP or an incorporated practice that holds client money must reconcile every client account at least every five weeks. For the wider framework around client money, interest and the annual report, see our SRA Accounts Rules Essentials guide. If you have a question about your firm's specific position, contact us and we will point you in the right direction.