SRA audit and compliance for law firms
If your law firm holds client money, you need an annual accountant’s report under the SRA accounts rules. Get it wrong and you face regulatory action, potential intervention, and reputational damage that’s hard to recover from.
We’ve carried out SRA audit work for law firms across England and Wales for over 20 years. We understand the requirements, we know where firms commonly fall short, and we deliver the report without disrupting your practice.
What is an SRA audit?
An SRA audit is a specialist examination of how a law firm handles client money. The auditor reviews the firm’s compliance with the SRA Accounts Rules 2019 (sometimes called the solicitors accounts rules), tests reconciliation procedures, checks that client funds are properly separated from office funds, and looks for any breach of the rules. The finished report goes directly to the Solicitors Regulation Authority.
This isn’t a standard financial audit. It’s a compliance engagement focused specifically on how the firm manages client money, its record-keeping, and the systems and controls around handling those funds. The person producing the report needs to hold the appropriate qualification under the SRA’s requirements.
Who needs one?
Any law firm that holds or receives client money during the reporting period must obtain a report. This applies to sole practitioners, partnerships, LLPs, and incorporated practices. Even if the firm only held client money briefly for a single conveyancing matter, the obligation applies.
Firms must deliver the report to the SRA within six months of their accounting period end. Late filing is itself a compliance failure that the SRA records.
How long does a solicitors audit take?
For a well-organised firm with clean records, we typically complete fieldwork in two to three days. Larger practices with multiple client accounts, or firms where the bank reconciliation process needs attention, take longer.
Preparation is the key factor. If your bank reconciliations are up to date, your client balances tie up, and your transfers between client and office are properly documented, the process runs smoothly. We send a preparation checklist before we start. Most of our law firm clients find it gets easier each year as they build better habits.
Common issues we find
After two decades of SRA audit work, the same problems recur:
- Gaps around month-end bank statement timing
- Residual balances on ledger accounts for completed matters
- Transfers from client to office made before delivering bills
- Mixed payments not correctly split between client and office money
- Inadequate records of who authorised withdrawals
- Breach of the rules that the firm didn’t know about
None of these are unusual. What matters is identifying each breach, taking corrective action, and making sure the firm is compliant going forward. We report every breach to the SRA as required, but we also help your law firm put best practice processes in place so issues don’t recur.
SRA compliance between audits
The report is a snapshot at the reporting date. Maintaining day-to-day compliance with the accounts rules is an ongoing responsibility. We help law firms with:
- Monthly review of client account procedures
- Staff training on the Accounts Rules 2019
- Advice on handling client money in complex transactions
- Preparing for SRA desk-based reviews and forensic investigations
- Setting up proper procedures for new practice areas
Our goal isn’t just signing the report. It’s ensuring compliance between audit visits for your law firm, with the right measures built into your processes.
Protecting client funds
The rules exist to protect the money solicitors hold on behalf of clients in conveyancing, probate, litigation, and commercial transactions. The amounts can be substantial, and the consequences of mishandling these funds – whether through error or fraud – are severe for both the firm and its clients.
Our audit work goes beyond ticking boxes. We look at whether the firm’s procedures genuinely protect what’s held on behalf of clients in practice. The audit tests the controls around who can access client money, how payments are authorised, and whether there’s adequate segregation of duties. For larger law firms, we also assess whether the compliance function is properly resourced and whether the COFA role is being carried out effectively.
Choosing your SRA auditor
Not every accountant can produce an SRA report. The firm carrying out the work must hold the appropriate qualification and have real experience with the regulatory framework. A generalist practice that handles one or two law firms a year won’t have the depth of knowledge to spot compliance risks efficiently.
Our team works with law firms regularly. We understand the commercial pressures solicitors face alongside the regulatory requirements. We’ve seen how the SRA responds to different types of breach, and we can advise on the practical steps to reduce exposure.
We’re ICAEW-regulated and on the Register of Statutory Auditors. Our fees are fixed and agreed before work starts. We work with law firms across the country from our Manchester office.
If your firm needs a new audit provider, or if you want a second opinion on your compliance position, call us on 0161 832 4451 or request a callback.
