Member Article

Response to SRA Board defers decision on Accountants Reports

At its July meeting the Board of the Solicitors Regulation Authority (SRA) decided to defer a decision on implementing changes to Reporting Accountant Requirements. The new measures are intended to ensure that where legal firms choose to hold client money, appropriate safeguards are in place to assure the safety of that money.

However, at the meeting the SRA Board announced that there was objection to changing the system to enable a legal firm’s COFA (Compliance Officer for Finance and Administration) to sign a declaration in place of a full Accountants’ Report.

Stephen Wetherall, Audit & Technical Director at Shaw Gibbs, says: “We welcome this decision to defer pending further analysis. It is also our understanding that whilst the requirements for Accountants’ Reports are still being considered, the proposal for COFA’s to be able to sign off such a Report has been dropped entirely.”

The SRA Board declared that much of the information in the current Accountants’ Report does not go far enough in the level of analysis it can provide on a legal firm’s financial compliance. It also decided that further analysis of the consultation process should be carried out, along with full consideration of the available options.

The decision has therefore been deferred until its September meeting, when it will reconsider whether a revised Accountants’ Report should be compulsory and, if so, what it should contain.

Stephen Wetherall adds: “We anticipate an eventual outcome that the Accountants’ Report will be retained, albeit in a different format.

“We also expect to see a transition period, once the changes are announced, of around 12 months to give accountants time to adopt and integrate the new system.”

The Reporting Accounting Requirements announced May 7 2014, are part of an overall reform programme to the SRA Board’s regulatory requirements. The reforms are intended to make the requirements more proportionate and targeted, in order to reduce the cost and burden of regulation.

When fully implemented the reform programme will:

• remove unnecessary regulatory barriers and restrictions to enable increased competition, innovation and growth to serve the consumers of legal services better,
• reduce unnecessary regulatory burdens and cost on regulated firms,
• ensure that regulation is properly targeted and proportionate for all solicitors and regulated businesses, particularly small businesses

For the full list of changes announced at the SRA Board’s July meeting, please visit http://www.sra.org.uk/.

This was posted in Bdaily's Members' News section by Shaw Gibbs .