Legal Aid BACS – To spreadsheet or not to spreadsheet?
This article will explore the different ways in which Legal Aid BACs can be entered onto your legal accounts system and the positive benefits of the spreadsheet method including aiding with compliance with the SRA Accounts Rules.
Posting Legal Aid onto your accounts system can utilise various methods:
The first is to post the BACs schedule directly, line by line, including the recoups and then apply the LAA receipt.
The second also posts directly from the BACS schedule and calculates the net difference between recoups and monies received to ascertain the final bill to post.
The third is to produce an excel spreadsheet of the BACs schedule and then use this to post the sum of the total bill received less the recoups.
The method used will always come back to personal preference and the setup of the systems within the firm.
The first method ensures that the details from the BACs schedules are posted in full to each ledger so that each transaction is accounted for in full. Although it does not use a spreadsheet, this can be time consuming where the BACs schedules are large and there are multiple branches.
The second method is quicker, involves fewer steps and is ideal for use where the BACs schedules are relatively small, and the final bills are straight forward. It is also beneficial where the same bookkeeper who posts the BACs also submits the claims for disbursements, and therefore has an in-depth knowledge of what has been claimed previously for each ledger.
The third method will obviously be more time consuming, but it does come with a wide range of benefits, particularly when dealing with multiple BACs schedules for different branches, or when the BACs schedule deals with many matters and claims, and/or complex final bills. This method is also useful where different people are involved in claiming POA’s for disbursements, posting the BACs, and paying out the disbursements within an organization.
I personally, was taught to use the excel spreadsheet method, and find this infinitely more helpful when posting the BACs schedules for my clients, therefore this method is my preference!
When using an excel spreadsheet, the information from the BACs schedule is copied across and formatted by applying a subtotal formula whenever the client’s name changes. This creates a subtotal of funds received for each client in the BACs schedule. When a final bill has been received this creates the bill to be posted and receipted, that can be checked against the ledger.
So, do the benefits out-weigh the disadvantage of the excel spreadsheet being more time consuming? I will look at the benefits in more detail below.
- I use the spreadsheet as a running record for the month, where issues & missing invoices can be recorded together with responses to create an easily accessible audit of correspondence for the BACs schedule. This is extremely useful when you are dealing with multiple BACs schedules for different branches of the same company. The spreadsheet can also be checked at the end of each month prior to month end to ensure that all issues have been resolved. This is of even greater use, where more than one person is involved with posting the BACs schedules throughout the month, as the spreadsheet allows an ongoing narrative accessible to everyone. The spreadsheet will do a lot of the hard work for you and allow you to keep detailed, ongoing records easily.
- When disbursement invoices are missing from the source folders, I highlight the POA and annotate on the spreadsheet to direct me to follow up. This will help to ensure that disbursements are paid out promptly, in accordance with SRA accounts rules.
- Chasing for missing disbursement invoices will also identify when POA’s have been incorrectly submitted, and we recommend the funds be transferred to client account until they are recouped. This is best practice.
- By using the spreadsheet I am able to quickly check the totals that need to be posted to each ledger and also highlight any differences in VAT that may arise for monies received for disbursements that need to be paid out, where rounding produces small differences in the money received and the total of the invoice to be paid. With disbursements, the rounding difference usually results in either an office credit balance of 0.01p that needs to be transferred to client account, or an office debit balance of 0.01p that can be accounted for when the final bill is received.
- I can check whether the final bill received matches the balances outstanding on the matter for disbursements such as travel, so that when I post the final bill and receipt, the ledger will zero ready to be archived. The sum of the final bill will also identify if there will be an office balance where the disbursements have been underpaid, expert fees have been reduced or if a recoup by the LAA is needed. The total for the final bill will direct me if further investigation is needed before the ledger can be finalized and allow me to identify disbursements paid out that have been posted to the wrong ledger.
- VAT savings can be easily calculated where firms wish to save VAT for all VATable income received on a weekly basis, again across multiple branches, and a record of the VAT saved can be kept.
When working for firms with a large Legal Aid department, clear audit trails that detail all queries and responses are key for keeping the ledgers accurate, compliant and up to date in preparation for final claim 1 bills that zero the ledgers, ready to be archived at the end of the matter, I think that using a spreadsheet provides the most efficient way to create this audit trail.
Ashling Tustin MAAT
Senior Legal Cashier
The Law Factory
