Are you putting the correct date on client ledgers?
The date posted to the client ledger must always be the date that the transaction took place. The following Rules and Guidelines pick up this point:
Rule 1 (f) ‘A solicitors must comply with the requirements of rule 1 of the Solicitors’ Code of Conduct 2007, and in particular must…(f) keep proper accounting records to show accurately the position with regard to the money held for each client…’
Guideline 2.3 ‘Proper books of account should be maintained on a double-entry principle. They should be legible, up to date and contain narratives with the entries which identify and/or provide adequate information about the transaction. Entries should be made in chronological order and the current balance should be shown on client ledger accounts, or be readily ascertainable, in accordance with rule 32 (5).’
Consider the following:
Client account payments
The date on the ledger should be the date of the telegraphic transfer date or the date a cheque is raised. They should not be the date the payment clears the bank. If a payment authorisation chit is raised but funds were not available in client account that day, the chit should be amended to reflect the date of the actual payment.
Client account transfers
Transfers from client to office and vice versa should be posted to the ledger on the same day as the transfer takes place at the bank. Accounts office staff may have to set up a procedure to process a daily bank transfer to ensure that no dates are missed.
Client account receipts
The date on the ledger should reflect the date the funds were received by the Practice and not the date funds were banked or processed by the accounts office. A cheques received register is a good internal control to help achieve this.
A cheques received register will also help to ensure client money received is banked in line with Rule 15 (1) ‘Client money must without delay be paid into a client account…’ as the accounts staff will be able to review the cheques received register to see if all of those funds noted have been sent to them for banking, and enable them to chase fee earners for cheques that may be sat on desks, for example.