Summary
Summary ULAW LPC, Solicitors Accounts Chapter Readings
- Course
- Institution
ULAW LPC, Solicitors Accounts Chapter Readings
[Show more]
Seller
Follow
tiffany_liao
Content preview
Intro to PP – WS1 Solicitors Accounts TIFF LIAOChapter 10 – Entries for Recording Simple Client Transactions page 111
INTRODUCTION
- The SRA Accounts Rules are concerned with:
(a) keeping client money safe; AND
(b) ensuring that proper records are kept to allow errors and discrepancies to be picked up on inspection by reporting
accountants and the SRA
= there are rules relating to the handling of money during client transactions and its recordings
SUMMARY
A law firm will have TWO CASH ACCOUNTS
One for business money and one for client money = frequently shown side by side
A law firm will have TWO CLIENT LEDGER ACCOUNTS
One for business money dealings and one for client money dealings = frequently shown side by side
When dealing with CASH RECIEPTS OR PAYEMNTS:
First, decide whether it involves BUSINESS or CLIENT money
Then, record the receipt of payment in the appropriate section of the accounts
The entries for RECIEPT are:
CR on CLIENT ledger
DR on CASH account in the BUSINESS section as appropriate
The entries for PAYMENTS are:
DR on CLIENT ledger
CR on CASH account in the BUSINESS section as appropriate
When a BILL IS SENT, entries are made:
(a) Record professional charged with a DR entry in the BUSINESS section of the CLIENT ledger and CR entry in the
profit costs account
Record the VAT DR entry in the BUSINESS section of the CLIENT ledger and CR entry in the HMRC account
THE TWO SETS
OF ACCOUNTING RECORDS
- A more sophisticated day-to-day accounts is needed for a firm providing regulated services than for most other
businesses
- It’s essential that all the records of ‘client money’ dealings are clearly separated from the records of the ordinary
business dealings of the firm
- RULE 8 sets out the recording requirements of the Rules
- Think of a law firm as carrying on two separate businesses with two separate sets of accounts
(a) For the first business – business which handles client money; AND
(b) For the second – say the firms ordinary business accounts
= the two sets of accounts are entirely SEPARATE.
= you CANNOT enter a debt in one set of accounts (a) and credit on the other set (b)
1
TIFF LIAO
, Intro to PP – WS1 Solicitors Accounts TIFF LIAO
Chapter 10 – Entries for Recording Simple Client Transactions page 111
THE FORMAT
OF THE ACCOUNTS
REQUIREMENTS AS TO FORMATS
- Various systems on the market that law firms can choose which enable the recording requirement of RULE 8 to be
satisfies
- They’re all based on the principles of double entry bookkeeping
- Guidance issued by the SRA ‘helping you keep accurate client accounting records’ includes:
your books should be maintained on the double-entry principle. This means that every transaction relating to
client money should be recorded in at least the client cash book and the client ledger.
your books should be legible, up to date and contain narratives alongside the entries which identify and provide
adequate information about the transaction. The current balance, if not shown on the client ledger account,
should be readily ascertainable. In accordance with Rule 8, entries should be made in chronological order and
record the date of the underlying transaction.
ledger accounts should include the name of the client or other person or trust for whom the money is held and
contain a heading which provides a description of the matter or transaction, for example, Client: Mr A Nother:
Matter: sale of 1 Property Road, London. This will help you link the money held or received with those for whom
it is held.
BUSINESS account entries (which reflect, for example, money due to your firm for costs) in relation to each client
or trust matter are kept up to date as well as the client account entries. This is because it is important to make
sure that any credit balances on the business side of the client ledger in respect of client or trust matters are
reviewed on a regular basis. For example, at the same time you carry out client account reconciliations, and fully
investigated in case of any impact on the client or trust matter and the monies you hold for them.
you keep a separate contemporaneous and chronological record of any inter-ledger transfers.
DUAL - A law firm is required by RULE 8.1(c) to keep cash account for dealings with the client bank account
CASH
ACCOUNT - The rules DO NOT require firms to have a cash account to record dealing with its own money
- Therefore, the law firm will need at least TWO SEPARATE cash accounts
- To ease the administrative burden of actually moving from a cash account in one place to another and
back again
normal format = have two individual cash accounts on the same page next to one another
DUAL - RULE 8.1 requires dealings with client money on behalf of the client to be recorded
LEDGER
- It ALSO requires:
(a) the issue of bills to a client
(b) payment on the firms own money on behalf of clients; and
(c) receipts in payment of bills to be recorded
= requires two separate ledger accounts, although as with the two CASH accounts, it usual to
COMBINE the two ledger accounts to show them side by side
2
TIFF LIAO
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller tiffany_liao. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $5.79. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
50843 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now