The Solicitors Regulation Authority ('SRA') have proposed that there should no longer be any requirement for an accountant's report on client money and that, in its place, the COFA (Compliance Officer for Finance and Administration) should sign a declaration that the firm is managing the client account in accordance with the SRA Account Rules.
They estimate that around 9,000 firms of solicitors are paying for accountant's reports and that a small firm will be paying around £800 for each report (and considerably more if the firm is larger). This comes to an absolute minimum of £7.2m! They do though mention in passing that over 50% of reports are qualified!
The SRA also estimate that the costs of processing, assessing, storing and ultimately destroying the reports are about £200,000 a year. The implication seems to be that all this is unnecessary bureaucratic cost which should be saved at little cost to society?
My question in this blog is to ask readers whether there might not currently be some substantial benefits to society from accountant's reports and also to express some worries as to what might happen if the reports were indeed abolished.
We do seem to hear very frequently of errors being made in client accounts and not infrequently of funds actually going missing?
See here for a recent example. I stress that the solicitor in question has not actually been found guilty of any fraud but this was simply the most recently reported example of significant sums of client money apparently going missing.
Firms currently carrying out such work may have opinions that they would like to express as the benefits and costs of the abolition, and should note that the SRA consultation is open until 18 June (not very long!). It is expected that the ICAEW Solicitors Special Interest Group will submit a response.
Obviously there are also implications for the revenues and services provided by practising accountants to their solicitor clients.
Do please comment below and feel free to describe any relevant 'experiences'!!!