The rigid requirements on the submission of accountants' reports are set to be relaxed.
Accountants will be able to use their professional judgement in future to assess if the reports they prepare for solicitors' practices comply with SRA account rules. Accountants will no longer need to qualify accounts for trivial breaches of the rules, but instead can focus on risks to client money.
The exemption from the requirement for lower-risk firms to obtain an accountant's report will be extended to include firms with an average client balance of less than £10,000 a year and a maximum account balance of £250,000.
The SRA changes are subject to approval by the Legal Services Board. If approved, the amendments would be part of Version 15 of the SRA Handbook that goes live on 1 November 2015. Revised accountants' report forms will be available for use after 1 November 2015 and will apply to all firms whose accounting period ends on or after that date.
The SRA board papers include the following proposed changes to the reporting accountant’s requirements in the SRA Accounts Rules 2011 (the ‘Accounts Rules’):
note the report summarising the outcome of our consultation on the reporting accountant’s requirements attached at Annex 1 (paragraphs 5 to 8)
note the new guidance for reporting accountants (Annex 3) and the new accountants report form (Annex 4) (paragraphs 9 to 38)
to agree to extend the categories of lower risk firms exempt from the requirement to obtain an accountant’s report to include those who, during the relevant accounting year have had an average client account balance of £10,000 or less, and a maximum client account balance of £250,000 or less (paragraphs 39 to 61)
to make the amendments to the Accounts Rules under rule 2 of the SRA Amendments to Regulatory Arrangements (Accountant’s Reports and Overseas Rules) Rules) [2015], with the exception of the changes to Part 7 of the Accounts Rules (Annex 2). (paragraph 64).
