The importance of good solid accounting systems.

Welcome to my TLF blog. My name is Alex and I have worked for The Law Factory since 2000. I have spent much of this time working in problem solving and accounts reconstruction. The main cause of  a non-compliant set of accounts is lack of strong systems in place to cope with the Solicitors Accounts Rules (SAR). […]

Welcome to my TLF blog. My name is Alex and I have worked for The Law Factory since 2000. I have spent much of this time working in problem solving and accounts reconstruction. The main cause of  a non-compliant set of accounts is lack of strong systems in place to cope with the Solicitors Accounts Rules (SAR).

There are two very important roles that need to be filled within a practice for the firm to have an effective accounts department, the first of which is a good set of bookkeepers. There are many decent bookkeepers in the UK but finding ones with the required knowledge of SARs and an understanding of the idiosyncrasies of the various legal accounting software packages is not always straightforward. With this element of the practice there must be no compromise. The slightest error or mistake must be identified quickly. If errors are not found and rectified, they will be picked up on the audit and be qualified as a breach to the Solicitors Regulatory Authority (SRA) in the accountant’s management letter.

The second role is having a good office manager. This may be dealt with by the accounts department if the firm is very small but in medium to large firms an office manager is essential. The office manager could be a partner or a fee earner, but usually they are part of the administration staff. This person needs to be in charge of collation of information, such as slips and bank statements as well as performing tasks like paying in and checking that no financial information is missing before handing it to the accounts department. The office manager bridges the gap between the accounts department and the fee earning staff.

Key Areas where good systems are required:

• Client money received

• Client money paid/requested

• Disbursements (office) paid/requested

• Bills Issued

• Transfers between accounts (client to office/vice versa)

• Office money received

• Office money paid/requested (overheads)

• Legal Aid – (CDS, CMRF, Crown Court, Certificated Civil Cases)

• Bank Reconciliation amp; Financial Reporting

• Dealing with accountants and other auditors

Routine is also key to having good office systems. Everything needs to be done in a particular order for it to work. If you have a solid, fixed routine it keeps everything under control. It is when you are unsure about where you are with your work that things go missing and mistakes are made.

The hard part is implementing these systems and getting staff to follow them and this cannot be done without a strong office manager and a strong accounts department. Many companies fall into the trap of believing that they cannot afford these things. In my experience a successful, compliant law firm cannot afford not to have these things!

Compliance is King. Make sure you cover all of the bases.

The Law Factory specialises in legal bookkeeping and can provide a very strong and comprehensive accounts department, tailor made to your practice. We are experts in helping to implement systems to create a compliant and efficient firm. There will be a fuller article on this topic on the website shortly with a detailed breakdown of the systems we implement in all of the areas listed in this blog

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