Recent changes to legal sector accounting have delivered a “greater focus” on issues of genuine concern, according to the Solicitors Regulation Authority (SRA).
The review follows reforms to allow accountants to apply greater professional judgement in reviewing risks to client money. Under the changes, accountants are no longer required to qualify reports for minor breaches.
Instead, they could consider whether a breach constituted a genuine risk to client money.
The regulator argued that the highly technical and specific nature of the Accounts Rules contributed to a vast majority of breaches occurring – both minor and major.
The SRA says the changes have led to a reduction of accounts being submitted for review by around two-thirds.
The figures show that between June and November 2017, 923 qualified reports – accounts where a potential issue or rule breach has been identified – were submitted, down from 2,797 over the same period in 2015.
The reduction in volume had coincided with a trebling of the number of reports the SRA is able to investigate “more fully” because the reasons for qualifying the reports focus more specifically on genuine risks to client money, it says.
Of those submitted between June and November 2017, 121 reports were further investigated, compared to just 38 two years earlier.
The Account Rules handbook is set to be amended once again from 2019 onwards, with a keen focus on keeping client money safe and removing much of the prescriptive detail from the rules.
Paul Philip, Chief Executive of the SRA, said: “These findings are encouraging and show that this approach is meeting our expectations. We are ensuring a sharp focus on public protection, while reducing unnecessary bureaucracy for firms.”
