Accountants' reports and regulatory compliance - Deadlines and submission procedures

Learning Outcomes

After reading this article, you will be able to explain the purpose of accountants' reports under the SRA Accounts Rules, identify which firms are required to obtain and deliver these reports, understand the key deadlines and submission procedures, recognise exemptions, and describe the consequences of non-compliance. You will also be able to apply these principles to SQE1-style scenarios.

SQE1 Syllabus

For SQE1, you are required to understand the regulatory requirements for accountants' reports under the SRA Accounts Rules. In your revision, focus on:

  • when a firm must obtain and deliver an accountant’s report
  • the deadlines for obtaining and submitting the report
  • who is qualified to prepare the report
  • the main content and scope of the report
  • exemptions from the reporting requirement
  • the SRA’s powers to require a report or waive the requirement
  • the consequences of failing to comply with reporting obligations

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

  1. Which firms are exempt from obtaining an accountant’s report under the SRA Accounts Rules?
  2. What is the deadline for delivering a qualified accountant’s report to the SRA?
  3. Who is responsible for preparing and signing an accountant’s report for a law firm?
  4. What are the consequences if a firm fails to deliver a required accountant’s report within the deadline?

Introduction

Accountants' reports are a key part of the regulatory framework for solicitors in England and Wales. They provide independent assurance that client money is being handled in accordance with the SRA Accounts Rules. For the SQE1 exam, you must know when a report is required, who prepares it, the deadlines for submission, and what happens if a firm fails to comply.

The Purpose of Accountants' Reports

The SRA requires most firms that hold or receive client money to obtain an independent accountant’s report after every accounting period. This report confirms whether the firm has complied with the Accounts Rules and whether client money has been put at risk.

Key Term: accountant’s report
A report prepared by a qualified accountant, reviewing a law firm’s compliance with the SRA Accounts Rules, especially in relation to the handling of client money.

When Is an Accountant’s Report Required?

A firm must obtain an accountant’s report if, at any time during its accounting period, it has held or received client money, or operated a joint account or a client’s own account as signatory. The requirement also applies to firms that have ceased holding client money during the period.

Key Term: accounting period
The period (normally twelve months) for which a firm prepares its financial statements and must obtain an accountant’s report.

Who Can Prepare the Report?

The report must be prepared and signed by an accountant who is a member of a recognised chartered accountancy body and is, or works for, a registered auditor. The accountant must be independent and not involved in the day-to-day running of the firm.

Key Term: qualified accountant
An accountant who is a member of a recognised chartered accountancy body and is, or works for, a registered auditor, and is eligible to prepare an accountant’s report for a law firm.

What Must the Report Cover?

The accountant’s report must review the firm’s compliance with key areas of the Accounts Rules, including:

  • the operation and use of client accounts
  • withdrawals from client account
  • the duty to correct breaches promptly
  • client accounting systems and controls
  • record-keeping and reconciliations

The accountant must use professional judgement to decide whether any breaches are material and whether the report should be qualified.

Key Term: qualified report
An accountant’s report that identifies material breaches of the Accounts Rules or significant risks to client money, and must be delivered to the SRA.

Deadlines for Obtaining and Delivering the Report

A firm must obtain the accountant’s report within six months of the end of its accounting period. If the report is qualified, it must be delivered to the SRA within the same six-month period. The responsibility for delivery lies with the firm, not the accountant.

Key Term: qualified report
An accountant’s report that identifies serious breaches or risks to client money and must be submitted to the SRA.

Exemptions from the Reporting Requirement

Some firms are exempt from obtaining an accountant’s report if they meet both of the following criteria during the accounting period:

  • the average balance of client money held does not exceed £10,000; and
  • the maximum balance at any time does not exceed £250,000.

Firms that only hold client money received from the Legal Aid Agency are also exempt. However, the SRA can require a report at any time if it considers it necessary in the public interest.

Key Term: exemption (accountants’ report)
A firm is not required to obtain an accountant’s report if it meets the SRA’s criteria for low client money balances or only holds Legal Aid Agency funds.

Submission Procedures

The firm must ensure the following steps are followed:

  1. Appoint a qualified accountant and agree the terms of engagement.
  2. Provide the accountant with all necessary information and access to records.
  3. Obtain the report within six months of the end of the accounting period.
  4. If the report is qualified, deliver it to the SRA within the same six-month period.
  5. Retain a copy of the report and the engagement terms for at least six years.

Key Term: SRA (Solicitors Regulation Authority)
The regulatory body for solicitors in England and Wales, responsible for enforcing the Accounts Rules and receiving qualified accountant’s reports.

SRA Powers and Waivers

The SRA may require a firm to obtain and deliver an accountant’s report at any time, even if the firm is otherwise exempt. The SRA may also grant a waiver from the requirement in exceptional circumstances.

Consequences of Non-Compliance

Failure to obtain or deliver a required accountant’s report is a serious breach of the Accounts Rules. The SRA may impose financial penalties, restrict the firm’s ability to handle client money, or take disciplinary action against the firm or its managers. Persistent or serious failures may result in intervention or referral to the Solicitors Disciplinary Tribunal.

Worked Example 1.1

A small firm holds client money throughout the year, but the average balance is £8,000 and the maximum at any time is £12,000. Is the firm required to obtain an accountant’s report?

Answer: No. The firm is exempt because both the average and maximum balances are below the SRA’s thresholds.

Worked Example 1.2

A firm’s accounting period ends on 31 March. The accountant completes a qualified report on 15 July. By what date must the firm deliver the report to the SRA?

Answer: The deadline is 30 September (six months after 31 March). The firm must deliver the qualified report to the SRA by this date.

Exam Warning

If a firm fails to deliver a required accountant’s report within the deadline, the SRA may impose a late submission fee and take disciplinary action. Always check the current SRA guidance for any changes to deadlines or procedures.

Key Point Checklist

This article has covered the following key knowledge points:

  • Most firms holding or receiving client money must obtain an accountant’s report after every accounting period.
  • The report must be prepared by a qualified accountant and obtained within six months of the end of the accounting period.
  • Only qualified reports (those identifying material breaches or risks to client money) must be delivered to the SRA within the same six-month period.
  • Firms are exempt if both the average and maximum client money balances are below the SRA’s thresholds, or if they only hold Legal Aid Agency funds.
  • The SRA can require a report or grant a waiver at any time.
  • Failure to comply with reporting obligations can result in penalties, restrictions, or disciplinary action.

Key Terms and Concepts

  • accountant’s report
  • accounting period
  • qualified accountant
  • qualified report
  • exemption (accountants’ report)
  • SRA (Solicitors Regulation Authority)
The answers, solutions, explanations, and written content provided on this page represent PastPaperHero's interpretation of academic material and potential responses to given questions. These are not guaranteed to be the only correct or definitive answers or explanations. Alternative valid responses, interpretations, or approaches may exist. If you believe any content is incorrect, outdated, or could be improved, please get in touch with us and we will review and make necessary amendments if we deem it appropriate. As per our terms and conditions, PastPaperHero shall not be held liable or responsible for any consequences arising. This includes, but is not limited to, incorrect answers in assignments, exams, or any form of testing administered by educational institutions or examination boards, as well as any misunderstandings or misapplications of concepts explained in our written content. Users are responsible for verifying that the methods, procedures, and explanations presented align with those taught in their respective educational settings and with current academic standards. While we strive to provide high-quality, accurate, and up-to-date content, PastPaperHero does not guarantee the completeness or accuracy of our written explanations, nor any specific outcomes in academic understanding or testing, whether formal or informal.
No resources available.

Job & Test Prep on a Budget

Compare PastPaperHero's subscription offering to the wider market

PastPaperHero
Monthly Plan
$10
Assessment Day
One-time Fee
$20-39
Barbri SQE
One-time Fee
$3,800-6,900
BPP SQE
One-time Fee
$5,400-8,200
College of Legal P...
One-time Fee
$2,300-9,100
Job Test Prep
One-time Fee
$90-350
Law Training Centr...
One-time Fee
$500-6,200
QLTS SQE
One-time Fee
$2,500-3,800
University of Law...
One-time Fee
$6,200-22,400

Note the above prices are approximate and based on prices listed on the respective websites as of May 2025. Prices may vary based on location, currency exchange rates, and other factors.

Get unlimited access to thousands of practice questions, flashcards, and detailed explanations. Save over 90% compared to one-time courses while maintaining the flexibility to learn at your own pace.

All-in-one Learning Platform

Everything you need to master your assessments and job tests in one place

  • Comprehensive Content

    Access thousands of fully explained questions and cases across multiple subjects

  • Visual Learning

    Understand complex concepts with intuitive diagrams and flowcharts

  • Focused Practice

    Prepare for assessments with targeted practice materials and expert guidance

  • Personalized Learning

    Track your progress and focus on areas where you need improvement

  • Affordable Access

    Get quality educational resources at a fraction of traditional costs

Tell Us What You Think

Help us improve our resources by sharing your experience

Pleased to share that I have successfully passed the SQE1 exam on 1st attempt. With SQE2 exempted, I’m now one step closer to getting enrolled as a Solicitor of England and Wales! Would like to thank my seniors, colleagues, mentors and friends for all the support during this grueling journey. This is one of the most difficult bar exams in the world to undertake, especially alongside a full time job! So happy to help out any aspirant who may be reading this message! I had prepared from the University of Law SQE Manuals and the AI powered MCQ bank from PastPaperHero.

Saptarshi Chatterjee

Saptarshi Chatterjee

Senior Associate at Trilegal