SOLICITORS’ ACCOUNTS
Accounts Rules
Rule 1.2 says the “authorised body’s managers” are … responsible for compliance by the
authorised body, its managers and employees with these rules”.
You can assume any firm or sole practitioner is an authorised body.
“Manager” is defined in the Glossary as (including) “a member of an LLP”. “Member” is
defined in the Glossary as (including) “(b) in relation to an LLP, a member of that LLP”
Client and Office money & Ledger entries
Important that under Rule 2.1 Office and Client money must be kept separate
Rule 3.1 - keep 2 separate accounts “office cash” and “client cash”:
Office:
Office Cash: wages, maintenance, utilities, rates, interest, rent
PLUS: petty cash, profit costs, VAT account - nothing to do with money, just ‘paper
accounts’.
Client:
Client cash: all the money belonging to all clients. Must be able to account every penny to a
client.
Ledger entries:
Office ledger is what the client owes the firm. Must be DR or 0
Client ledger is what firm holds for client. Must be CR or 0
Approach:
1. Is this a client or office transaction? Can only be client money or office money
2. Complete this first, where possible.
3. Is money coming in or going out? CR or DR
4. Complete the other part of the double entry but NEVER mix client and office entries
5. Complete Date, Details and Balance
RULES:
Client money in client ledger:
- Money delivered by the client to the firm in relation to regulated services, e.g. cheque
from client, on account of costs. CR in Client ledger and DR in client cash.
- Money paid out on behalf of a client for a regulated service, where there is money in the
client account, e.g. payment of Land Registry fees
- Where client owes the firm, e.g. Bill sent to client; complete client’s office ledger first DR,
and CR in profit costs. [para 2.4 workbook]
Office money in client ledger:
- Petty cash is an office transaction: DR client’s office ledger (as coming out) and CR in
petty cash ledger
- Receipt of money on account of costs is office money, paid into client’s office ledger first-
CR office ledger, DR office cash - do not cancel out in profit costs
- Receipt of money on account of covering a disbursement is office money. CR office
ledger, DR office cash - do not cancel out in profit costs
- Paying money where there is no client money held for the client: DR office ledger, CR
office cash
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Accounts Rules
Rule 1.2 says the “authorised body’s managers” are … responsible for compliance by the
authorised body, its managers and employees with these rules”.
You can assume any firm or sole practitioner is an authorised body.
“Manager” is defined in the Glossary as (including) “a member of an LLP”. “Member” is
defined in the Glossary as (including) “(b) in relation to an LLP, a member of that LLP”
Client and Office money & Ledger entries
Important that under Rule 2.1 Office and Client money must be kept separate
Rule 3.1 - keep 2 separate accounts “office cash” and “client cash”:
Office:
Office Cash: wages, maintenance, utilities, rates, interest, rent
PLUS: petty cash, profit costs, VAT account - nothing to do with money, just ‘paper
accounts’.
Client:
Client cash: all the money belonging to all clients. Must be able to account every penny to a
client.
Ledger entries:
Office ledger is what the client owes the firm. Must be DR or 0
Client ledger is what firm holds for client. Must be CR or 0
Approach:
1. Is this a client or office transaction? Can only be client money or office money
2. Complete this first, where possible.
3. Is money coming in or going out? CR or DR
4. Complete the other part of the double entry but NEVER mix client and office entries
5. Complete Date, Details and Balance
RULES:
Client money in client ledger:
- Money delivered by the client to the firm in relation to regulated services, e.g. cheque
from client, on account of costs. CR in Client ledger and DR in client cash.
- Money paid out on behalf of a client for a regulated service, where there is money in the
client account, e.g. payment of Land Registry fees
- Where client owes the firm, e.g. Bill sent to client; complete client’s office ledger first DR,
and CR in profit costs. [para 2.4 workbook]
Office money in client ledger:
- Petty cash is an office transaction: DR client’s office ledger (as coming out) and CR in
petty cash ledger
- Receipt of money on account of costs is office money, paid into client’s office ledger first-
CR office ledger, DR office cash - do not cancel out in profit costs
- Receipt of money on account of covering a disbursement is office money. CR office
ledger, DR office cash - do not cancel out in profit costs
- Paying money where there is no client money held for the client: DR office ledger, CR
office cash
1
