Impact of the SRA’s announcement to keep the Accountants Report

September saw the SRA announce their decision not to abolish the Accountants Report, you will recall that this is the report that covers client monies and examines practice compliance within the Accounts Rules. With this communication the SRA also announced wider proposals. As we digest this latest information we ask if the AR announcement is likely to have an impact on legal firms. In summary:

·         Firms whose income is solely from Legal Aid are no longer required to complete a report, the SRA suggest that this will only count for 115 firms in England and Wales;

·         Only qualified reports will need submitting to the SRA, however the reports still need to be commissioned on an annual basis. This reporting process does provide a valuable tool in the firm’s assessment of compliance, but on the down side the costs and time involved for firms in adhering with this obligation will continue;

·         As the majority of firms have qualified reports, there would appear to be little change as most will therefore continue to have their reports submitted to the SRA.

However two of the proposals do provide some optimism:

·         SRA considering to redefine the criteria under which the report will be qualified which will hopefully remove those instances of qualification that commonly have no or limited impact on client monies and interests

·         Afull review of the Accounts Rules with an aim to reducing the length and complexity giving greater consideration to the risks associated with holding client money.

Although the announcement is unlikely to have any real impact on the majority of firms in the immediate future, the review of the Rules has long been overdue in order to make them more relevant to today’s firms. This is especially true for those smaller practices that make up the majority of legal practices within England and Wales. For these firms the obligations have for many years (and increasingly) been disproportionately burdensome…we will wait to see if the SRA deliver!