Audit Group provides SRA audit services for solicitors’ practices and law firms in England and Wales. If your firm holds client money, you need an accountant’s report under the Solicitors Accounts Rules. We’ve been helping firms stay compliant since 1948 – our audit and assurance team knows what the Solicitors Regulation Authority expects and how to keep the process straightforward.
What is an SRA audit?
An SRA audit is an independent examination of how your law firm handles client money. A registered auditor checks that you’re complying with the SRA standards and regulations that apply to money handling and client money management. The audit process covers your client bank account records, client ledger balances, and the systems and controls you have in place to protect client interests.
The accountants report is submitted to the SRA and covers your firm’s accounting period. If the report is qualified and shows breaches, this can trigger further investigation. Getting this right matters – the rules state that your firm must handle funds belonging to clients properly at all times.
Who needs an SRA audit?
Any solicitor or law firm that holds or receives client money must obtain an accountant’s report. The SRA audit requirements apply to sole practitioners, partnerships, LLPs and ABS firms alike. SRA-regulated law firms are covered regardless of size.
The report must be delivered to the SRA within six months of the accounting period end. If your firm has stopped holding client money, you still need a final report covering the months of the accounting period up to when you last held funds belonging to clients or third parties.
Firms that have never held money belonging to clients are exempt. But if client money held even occasionally – through conveyancing, probate work or on behalf of third parties – you still need an audit. The rules exist to keep client interests safe at every stage.
What the SRA Accounts Rules require
The Accounts Rules set out how firms must handle client money. Solicitors must comply with the SRA Accounts Rules on separation, reconciliation, banking, record keeping and financial management. The key compliance areas include:
- Separation – Client funds must be kept in a designated client account, separate from your firm’s own money
- Reconciliation – Reconciliations must be done at least every five weeks, comparing the client ledger with the statement or passbook balance from the client bank
- Prompt banking – Funds must be banked promptly into the client bank account when received
- No borrowing – You can’t use money from the client account to cover the firm’s own costs, even temporarily
- Residual client balances – Old unclaimed amounts must be dealt with properly, not left sitting indefinitely
- Audit trails – The firm must maintain proper books of account showing the position on each client matter at any time
Common breaches and how to avoid them
We see the same issues come up in regular audits across the solicitor firms we work with. It’s worth keeping a breach register so you can track and address problems quickly.
- Late reconciliations – The five-weekly rule catches firms that leave reconciliation to the end of the month. Set a calendar reminder.
- Mixing funds – Even a small transfer from the designated account to cover an office shortfall is a breach. It doesn’t matter if you put it back.
- Inadequate ledger entries – Entries on the client ledger need to clearly identify the matter, the amount and the reason for the transaction.
- Residual balances – Funds left after a matter closes need to be returned or dealt with. Leaving them creates risk.
- No written policy – The SRA expects firms to have a written policy on controls. Many smaller practices haven’t formalised this.
If a breach is found, it must be reported in the accountant’s report. Serious or repeated breaches will trigger intervention. Best practice is to fix issues as soon as they’re identified and keep client records updated with evidence of corrective action taken. Regulatory changes can also catch firms off guard, so compliance with the latest guidance from the SRA matters.
Preparing for an SRA audit
Preparing for your audit doesn’t have to be painful. A well-prepared firm makes the whole accounts audit faster and cheaper. Before our team arrives, gather the following:
- All bank statements for the accounting period (client account and office account)
- Completed reconciliations for every five-week period
- A list of any old unclaimed balances with explanations
- Your firm’s written procedures for SRA compliance
- Access to your practice management system and accounting software
We’ll send you a full checklist after you instruct us. Most of the information we need is routine – the more organised your records are, the smoother the process. And if you need to comply with the Solicitors Regulation Authority’s requirements for the first time, we can help you set up the right processes from the start.
What happens when a solicitor is reported to the SRA?
If your firm’s client account falls short on compliance with the SRA Accounts Rules, the consequences can be serious. The regulator can impose conditions, issue fines, or in the worst cases, intervene in your practice. Ensuring compliance with the SRA’s requirements at all times is a condition of holding a practising certificate. Firms that include handling client money reviews in their regular internal checks tend to avoid the worst outcomes.
The reporting accountant and audit process
Not just any accountant can sign off an SRA report. The reporting accountant must be a member of a body approved by the SRA – typically ICAEW, ACCA or another recognised professional body. Our audit team holds the right qualifications and has direct experience working with law firms in England and Wales on compliance with the Accounts Rules. We understand the full process inside and out.
The accountant reviews your client bank records, tests a sample of transactions, checks that reconciliations are up to date, and examines how you handle client matters day to day. If everything is in order, they issue an unqualified report. If the report is qualified, it means breaches were found – and the SRA will review the details.
Why choose Audit Group?
We’ve worked with solicitor practices of all sizes, from sole practitioners to multi-partner firms. Our accountants are ICAEW-registered and understand the legal services sector. We know that this isn’t just a compliance exercise – it’s about protecting your clients and your firm’s reputation.
- Specialists – We do this work regularly, not as an occasional sideline
- Fixed fees – Agreed upfront so you can budget. No hourly billing surprises
- Fast turnaround – We aim to complete and submit within four weeks of receiving your records
- Practical guidance – We don’t just report problems. We help you fix them and ensure compliance going forward
- Meets SRA standards – Our reporting meets the regulator’s requirements for qualified auditors
If your firm needs an audit or you want to switch to a more responsive accountant, get in touch. We’ll give you a clear quote and explain the process.
