Are you preparing your bank reconciliation statement correctly?
July 14, 2011
In order to ensure that you are preparing your bank reconciliation statement correctly, you must follow the Rule 32.7 of the Solicitors Accounts Rules, making sure the following procedures are adhered to.
1. Total all the general client accounts and separate designated client accounts, and accounts that are not client accounts but are holding client money (such as liquidators, trustees in bankruptcy and Court of Protection deputies) and cash that is client money.
Make sure that you include all bank accounts not forgetting client money that may not be sat in a client account (such as cash received and without delay paid in cash in the ordinary course of business to the client).
2. It is important to remember to run a client matter listing of all the balances shown by the client ledger accounts as at the same date that you have reconciled the bank accounts to.
Any debit balances should be listed, fully investigated and rectified immediately. The total of any debit balances cannot be “netted off” against the total of credit balances so they must be added back to the total.
3. Prepare a reconciliation statement. This statement should compare the total client bank and cash accounts (1) and the total client matter listing (2) above. Any differences need an explanation and prompt investigation.
A difference is not necessarily an “error”. It may be a timing difference where interest may have been credited to an account at month end but was unposted until shortly thereafter.
The reconciliation statement should be reviewed, signed and dated by the Partner/Director/Manager in accordance with the SRA guidelines. This should also be an opportunity for the partner to raise any observations or queries if anything is unusual. All workings and printouts should be attached so that the Partner/Director/Manager can see the full picture behind the reconciliation statement.
Reconciliations should be carried out at least every 5 weeks or every 14 weeks if in passbook-operated separate designated client accounts for money held by solicitor trustees. Reconciliations should be prepared no later than the due date for the next reconciliation.