What Is an SRA Accountant's Report?

An SRA accountant's report is a formal document prepared by a qualified accountant. It confirms that your solicitor firm has complied with the SRA Accounts Rules during the reporting period. The report covers client money handling, record-keeping, and reconciliation procedures.

The report must be submitted to the SRA within six months of your firm's accounting reference date. For most firms, this means by 31 October if your year-end is 30 April. Missing this deadline can trigger regulatory action, including conditions on your firm's practising certificate.

The accountant who prepares the report must be a member of a recognised supervisory body (such as ICAEW, ACCA, or ICAS). They must also hold a current practising certificate. The accountant cannot be a partner, member, or employee of your firm.

When Is the Report Required?

The core rule is straightforward. Every SRA-regulated solicitor firm must obtain an accountant's report for each accounting period unless a de minimis exemption applies. The exemption is set out in Rule 12.2 of the SRA Accounts Rules.

Your firm is exempt if both of the following conditions are met:

  • Your firm held no more than £10,000 of client money at any point during the accounting period.
  • The average client money balance throughout the period did not exceed £250.

If either threshold is breached, you must commission a report. This applies even if the breach was brief. For example, if a conveyancing transaction deposited £15,000 into your client account for one day, the exemption is lost for the entire period.

Many sole practitioner conveyancers assume they are exempt because they hold small balances. But a single house purchase transaction can easily push you over the £10,000 threshold. Check your client account records carefully before deciding you are exempt.

What Counts as Client Money?

Client money includes any money held or received by your firm on behalf of a client. This covers advance payments for disbursements, stamp duty land tax (SDLT) funds, and purchase deposits. It also includes money held in a client account for ongoing matters.

The SRA Accounts Rules define client money broadly. If you are unsure whether a particular sum qualifies, err on the side of caution. The COFA is responsible for making this judgement. If in doubt, commission the report.

The Five-Week Reconciliation Rule

Even if you are exempt from the accountant's report, you must still comply with the reconciliation requirements. Rule 8.3 of the SRA Accounts Rules requires firms to reconcile their client account at least every five weeks. This is a separate obligation from the accountant's report.

The reconciliation compares the client account balance on your bank statement with the total of all client ledger balances in your accounting system. Any discrepancies must be investigated and resolved promptly. The COFA should sign off each reconciliation.

Firms that are exempt from the accountant's report still need to maintain proper records. The SRA can request evidence of compliance at any time. A failure to produce reconciliations can lead to a referral to the SRA's enforcement team.

What Does the Accountant's Report Cover?

The accountant's report is not a full audit of your firm. It is a limited assurance engagement focused on client money compliance. The accountant will test a sample of client transactions, review reconciliations, and check that your firm has followed the SRA Accounts Rules.

The report includes a statement on whether the firm has complied with Rules 2 to 9 of the SRA Accounts Rules. These cover client money receipt, holding, payment, and recording. The accountant will also check that the firm has maintained proper accounting records and that reconciliations were completed on time.

If the accountant identifies breaches, they must report them. Minor breaches (such as a late reconciliation that was corrected quickly) may not require action. Material breaches (such as a shortfall in client money) must be reported to the SRA immediately.

Common Breaches Found in Reports

From our experience preparing reports for solicitor firms, the most common breaches include:

  • Failure to complete reconciliations within the five-week window.
  • Mixing client money with office money in the same account.
  • Holding client money for longer than necessary without returning it.
  • Incorrectly recording client money in the firm's accounting system.
  • Failing to pay interest on client money when it is fair to do so.

Each of these breaches can be avoided with proper systems and training. The COFA should review procedures annually and update the firm's compliance manual as needed.

Deadlines and Penalties

The accountant's report must be submitted to the SRA within six months of the end of your accounting period. For a firm with a 30 April year-end, the deadline is 31 October. For a 31 December year-end, the deadline is 30 June.

If you miss the deadline, the SRA may impose conditions on your firm's practising certificate. These conditions can restrict your ability to handle client money. In serious cases, the SRA may refer the matter to the Solicitors Disciplinary Tribunal.

The SRA also charges a fee for late submission. The fee is currently £100 for each month or part-month that the report is late. This is in addition to any regulatory action.

If your firm has never submitted a report before, or if you have changed accountants, allow at least three months for the process. The accountant needs time to review your records, test transactions, and prepare the report. Do not leave it until the last month.

Who Prepares the Report?

The accountant must be a registered auditor or a member of a recognised supervisory body with a practising certificate. They must also have experience in the SRA Accounts Rules. Not all general practice accountants understand the specific requirements for solicitor firms.

We recommend using an accountant who specialises in legal sector compliance. A specialist will know the common pitfalls and can help you correct issues before the report is finalised. They will also understand the nuances of the SRA Accounts Rules, such as the treatment of residual balances and the interest calculation rules.

You can find a list of approved accountants on the SRA's website. Alternatively, ask your COFA network for recommendations. Many firms use the same accountant year after year, which builds institutional knowledge and reduces the risk of surprises.

What If Your Firm Is Exempt?

If your firm meets the de minimis exemption, you do not need to submit an accountant's report. However, you must still maintain proper records and complete reconciliations. The SRA can request evidence of compliance at any time.

If your firm is exempt, you should document the basis for the exemption. Keep a record of your client money balances throughout the year. If you later need to commission a report (for example, because a transaction pushes you over the threshold), the accountant will need this data.

Many firms that are exempt choose to commission a voluntary report. This provides assurance to the COLP and COFA that the firm's systems are working correctly. It also demonstrates proactive compliance to the SRA if the firm is ever inspected.

How Accounts for Lawyers Can Help

We prepare SRA accountant's reports for solicitor firms across the UK. Our team understands the SRA Accounts Rules and the specific requirements for each type of firm, from sole practitioner conveyancers to multi-partner LLPs.

We work with your COFA to ensure the report is accurate and submitted on time. We also provide COFA compliance support to help you maintain good records throughout the year.

If you are unsure whether your firm needs a report, contact us. We can review your client money position and advise on the exemption. We also offer a free firm health check to identify any compliance gaps before the report is due.

For more detail on the SRA Accounts Rules, read our SRA Accounts Rules essentials guide. It covers the key rules every solicitor firm must follow.

Final Thoughts

The SRA accountant's report is a routine compliance requirement for most solicitor firms. The key is to know whether you need one and to plan ahead. The exemption thresholds are low, so most firms that hold client money will need a report.

Work with a specialist accountant who knows the SRA Accounts Rules. Keep your reconciliations up to date. And if you are unsure, commission the report. The cost of a report is small compared to the cost of regulatory action.

Speak to a legal-sector-specialist accountant for situation-specific advice. Every firm's circumstances are different, and the rules can be complex.