The importance of recording dates of transactions
It has been noted during visits to firms, that the recording of transactions on ledgers has not always been in accordance with the SRA Accounts Rules.
The date shown on the client ledger should always be the transaction originating date, not the processing date. Therefore it is important that fee earners and secretaries ensure their bills are issued and processed promptly, especially at month end. Bills are the usual documents that fail to be sent to the accounts department for timely input.
If client funds are available and not already earmarked in the client account, and a bill is raised, funds should be transferred within fourteen days of the bill date to the office account against the bill of costs. A breach may not be apparent when viewing the ledger if the bill date recorded is wrong. When your COFA is conducting their financial compliance file reviews they will need to ensure that they check original documentation against the ledger entries.
Should a client receipt of significant value be entered on the ledger late, the client could be deprived of an amount in lieu of interest, as the accounting system may compute the amount due from the date entered on the ledger. As this again is already a breach of the Rules, it could be compounded by a loss to the client when reporting to the COFA.
LSC receipts for legally aided work should be recorded as the date the funds were physically received into the office account, not the date the LSC statement is received or dated. This is particularly important if funds are to be transferred to the client account, as this is often done at the same time. You cannot transfer monies that have not been received, and the result would be to bank office monies in client account, which is not permitted.
Transfers from one bank account to another, be they office or client accounts, should be recorded as the date of the physical movement rather than the date of request. This is important if there is a time limit to the transfer or prompt remedial action is required.
For more information, please contact Karen Hain on 01772 821021.