Solicitor’s Accounts notes
Assessment
2 hour exam
64 marks combined:
o Ledger question: In relation to the sale and purchase of a property,
probate, litigation matter or purchase of a business
o Short answer questions on the Rules
26 marks for financial statement question
20 marks for MCQ’s (5 questions)
Financial Statement is ONLY in relation to the sale and purchase of property
Allowed to take into the exam
Copy of the SRA Accounts Rules
NO files or textbooks
Allowed to annotate the rules and use post-it notes
Passing the exam
Pass mark is 50%
You will get a mark for the paper but it won’t contribute to final grade
The key rules to focus on
Rule 2.1 – Definition of client money
Client money, 3rd parties (ie. Stakeholder money) non clients held to their order, as
agent, trustee, on account of costs,
Rule 2.3 – Receiving client money
Pay into client acc promptly unless 2.3c (unless agreed otherwise in writing),
Rule 4.2 – Mixed receipts
Rule 4.3 – Transfers of client money for costs
Rule 5 – withdrawals of client money
Rule 7 – Interest
Rule 8.1 – Ledgers and entries - record all dealings with client money
Tips
Distinguish client money from firm’s own money (and money not regulated by
SRA)
Explain how to deal with receipts:
o Paid into which bank account(s) – options?
o Treatment of disbursements.
N.B. Always be clear whether you are talking about one of the firm’s bank accounts
or its account records (ledger).
Explain how payments can be made:
- From which bank account – options?
- Treatment of disbursements
What to do with client money
Rule 2.3 – client money must be paid into the client account promptly.
Unless: e.g.
Rule 2.3(c) – alternative arrangements agreed in writing.
, Rule 8.1 – all dealings with client money must be appropriately
recorded.
Topics which will be on the MCQ’s and comprehensive questions but not
client ledger:
Interest paid on client money.
Principle and agency methods for paying disbursements
Client ledger question
The first thing you need to do is identify the client and matter
Details: Ensure that the corresponding entry of the ledger is the first word
Need to remember to put DR or CR after the balance.
It would be breaking the SRA rules if you went into DR on the client account.
The client account should also have a balance then CR at the end.
On the business side you are looking to put a DR.
There is never going to be a cash entry if it is an inter-client transfer.
Money going IN the client account – CREDIT in client ledger
Money going OUT the client account – DEBIT in client ledger
Money going IN the business account – CREDIT business account
Money OWED OR GOING OUT the business account – DEBT business
account
If you send a bill out to the client then this would be recorded on the DEBIT
column of the business side.
Exemplar ledger:
Client: Business Client
Matter:
DATE DETAILS DR CR BAL DR CR BAL
£ £ £ £ £ £
Carrying over balance
When carrying on the balance following a finished ledger sheet, you need to
make sure you remember to put the client name and matter at the top again.
Entry description on client ledger: Balance
Remember to use the date from the bottom of the last page.
Client: Amy Lennon Business Client
Matter: Sale of
Summer Villa /
Purchase of Roman
Way
DATE DETAILS DR CR BAL DR CR BAL
NOV £ £ £ £ £ £
9 Balance 924DR 69,486CR
, Cash on account
Need to remember that receiving money on account of costs is client money.
Need to record £500 on the client side of the client ledger.
When considering double entry, the money is coming into the account so it
would be cash.
Client: Amy Lennon Business Client
Matter: Sale of Summer
Villa / Purchase of
Roman Way
DATE DETAILS DR CR BAL DR CR BAL
OCT £ £ £ £ £ £
1 Cash. On 500 500CR
account
So description would be: Cash. On account.
Paying a disbursement
If you are passing official copies on without comment, then this will be a
disbursement.
If you have money on account then you would want to pay the disbursement
from the client account.
Client: Amy Lennon Business Client
Matter: Sale of Summer
Villa / Purchase of
Roman Way
DATE DETAILS DR CR BAL DR CR BAL
OCT £ £ £ £ £ £
1 Cash. On 500 500CR
account
7 Cash. Official 14 486CR
copies
It reduces the credit balance because we have paid some money on her
behalf.
Pay it separately on the client ledger when you are passing it on without
comment.
Assessment
2 hour exam
64 marks combined:
o Ledger question: In relation to the sale and purchase of a property,
probate, litigation matter or purchase of a business
o Short answer questions on the Rules
26 marks for financial statement question
20 marks for MCQ’s (5 questions)
Financial Statement is ONLY in relation to the sale and purchase of property
Allowed to take into the exam
Copy of the SRA Accounts Rules
NO files or textbooks
Allowed to annotate the rules and use post-it notes
Passing the exam
Pass mark is 50%
You will get a mark for the paper but it won’t contribute to final grade
The key rules to focus on
Rule 2.1 – Definition of client money
Client money, 3rd parties (ie. Stakeholder money) non clients held to their order, as
agent, trustee, on account of costs,
Rule 2.3 – Receiving client money
Pay into client acc promptly unless 2.3c (unless agreed otherwise in writing),
Rule 4.2 – Mixed receipts
Rule 4.3 – Transfers of client money for costs
Rule 5 – withdrawals of client money
Rule 7 – Interest
Rule 8.1 – Ledgers and entries - record all dealings with client money
Tips
Distinguish client money from firm’s own money (and money not regulated by
SRA)
Explain how to deal with receipts:
o Paid into which bank account(s) – options?
o Treatment of disbursements.
N.B. Always be clear whether you are talking about one of the firm’s bank accounts
or its account records (ledger).
Explain how payments can be made:
- From which bank account – options?
- Treatment of disbursements
What to do with client money
Rule 2.3 – client money must be paid into the client account promptly.
Unless: e.g.
Rule 2.3(c) – alternative arrangements agreed in writing.
, Rule 8.1 – all dealings with client money must be appropriately
recorded.
Topics which will be on the MCQ’s and comprehensive questions but not
client ledger:
Interest paid on client money.
Principle and agency methods for paying disbursements
Client ledger question
The first thing you need to do is identify the client and matter
Details: Ensure that the corresponding entry of the ledger is the first word
Need to remember to put DR or CR after the balance.
It would be breaking the SRA rules if you went into DR on the client account.
The client account should also have a balance then CR at the end.
On the business side you are looking to put a DR.
There is never going to be a cash entry if it is an inter-client transfer.
Money going IN the client account – CREDIT in client ledger
Money going OUT the client account – DEBIT in client ledger
Money going IN the business account – CREDIT business account
Money OWED OR GOING OUT the business account – DEBT business
account
If you send a bill out to the client then this would be recorded on the DEBIT
column of the business side.
Exemplar ledger:
Client: Business Client
Matter:
DATE DETAILS DR CR BAL DR CR BAL
£ £ £ £ £ £
Carrying over balance
When carrying on the balance following a finished ledger sheet, you need to
make sure you remember to put the client name and matter at the top again.
Entry description on client ledger: Balance
Remember to use the date from the bottom of the last page.
Client: Amy Lennon Business Client
Matter: Sale of
Summer Villa /
Purchase of Roman
Way
DATE DETAILS DR CR BAL DR CR BAL
NOV £ £ £ £ £ £
9 Balance 924DR 69,486CR
, Cash on account
Need to remember that receiving money on account of costs is client money.
Need to record £500 on the client side of the client ledger.
When considering double entry, the money is coming into the account so it
would be cash.
Client: Amy Lennon Business Client
Matter: Sale of Summer
Villa / Purchase of
Roman Way
DATE DETAILS DR CR BAL DR CR BAL
OCT £ £ £ £ £ £
1 Cash. On 500 500CR
account
So description would be: Cash. On account.
Paying a disbursement
If you are passing official copies on without comment, then this will be a
disbursement.
If you have money on account then you would want to pay the disbursement
from the client account.
Client: Amy Lennon Business Client
Matter: Sale of Summer
Villa / Purchase of
Roman Way
DATE DETAILS DR CR BAL DR CR BAL
OCT £ £ £ £ £ £
1 Cash. On 500 500CR
account
7 Cash. Official 14 486CR
copies
It reduces the credit balance because we have paid some money on her
behalf.
Pay it separately on the client ledger when you are passing it on without
comment.
