Session 2 Accounts procedures for fee

earners and support staff

2

Contents

• The basics

• Processing financial transactions

• Office and client money

• Receiving client or office money

• Withdrawals, payments and transfers

• The end of the matter and archiving

• Summary

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The basics

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Basic principles

• Duty to protect client money and assets

• SRA Accounts Rules 2011

• All fee earners and support staff must comply with the systems and procedures set out in this session and in the procedures document ‘Processing Financial Transactions’ which is located on the firm’s intranet

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Processing Financial Transactions

• Authorisation

• Use of E-chits

• Supporting documentation

• Contact details: Hayley Sheppard or Chris Ballinger at Windsor. They can be contacted by telephone on 01753 271640 or by email to accounts@parfittcresswell.com

• Time critical requests should be made as far as possible in advance and it is wise to telephone Hayley or Chris to ensure that they are alerted.

• Emails to accounts@parfittcresswell.com are monitored constantly but transaction volumes can result in delays so supporting telephone requests on urgent matters are advisable.

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Accounts team and systems

• Our main accounts team is located at our offices in Windsor and is led by Hayley Sheppard. She is assisted by Chris Ballinger. Further assistance is also provided by Maya Fender and Andrew Fielder both of whom are located at our office in Haywards Heath.

• We have a centralised accounting and time recording system known as Quill Pinpoint. Quill is fully integrated with our compliance management system known as Compliance Manager. Our accounts team are also supported by the Quill Pinpoint accounting team who are located in Manchester.

• Access to the accounts system is available from your desktop and you will have been provided with a unique username and password.

• Keep your accounts system password confidential and change it regularly

• Questions about the accounts and the time recording system should be directed to a member of the accounts team.

• Induction includes training on accounts systems

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Failure to comply

• Responsibility for compliance rests with the COFA and Deputy COFA

• However, all non-Accounts staff must be aware of and adhere to our Accounts procedures and related policies and procedures as set out in the firm’s manuals

• You may be liable to disciplinary action if you fail to comply

• If you become aware of a breach or potential breach of our Accounts procedures, report your concerns to the COFA

• We regularly review out procedures

• We provide information and/or training on changes to procedures

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Office and client money

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Office and client money

Office money is money that belongs to the firm and includes:

•money held or received in connection with running the firm, eg PAYE, or VAT

•interest on general client accounts

•payments received in respect of:

o a bill

o disbursements (i) already paid by the firm or (ii) incurred but not yet paid (excluding unpaid professional disbursements)

o money paid for or towards an agreed fee

•money in a client account and earmarked for costs

Client money is:

• money held or received for a client or as trustee

• all other money which is not office money

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Client account

• Client money must be held in a client account with a bank or building society in England and Wales

• Only client money may be paid into or held in a client account

• Money held in a client account must be immediately available

• Client money can be withheld from client account on the client's instructions

• We are not permitted to provide banking facilities through a client account and cannot therefore receive or hold funds for clients to pay routine bills and invoices on their behalf

• Escrow accounts and professional undertakings

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Receiving client or office money

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Receiving client or office money

• Comply with our Anti money-laundering (AML) and counter-terrorist financing (CTF) policy

• Pay client money into a client account without delay

• As a general rule all receipts will be paid into Client Account unless instructed otherwise by the COFA

• Processing receipts

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Receiving cash and cheques

• Pass all cash and cheques you receive (whether office or client money) without delay to the Accounts team

• When receiving cheques from clients you should complete the relevant e-chit

• Cash receipts and Cash Policy

• Notify COFA if you receive cash or a cheque that is unrelated to a matter or is excessive

• Cheques will be deemed to have cleared after 8 working days

• Receipts for cash and cheques delivered personally should always be given

• Clients seeking to pay their bills by credit card will be subject to a credit charge of 2% and 4% for AMEX cards

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Receiving BACS and CHAPS

• When money is received into our bank account, it must be properly allocated without delay

• If the Accounts team are unable to identify any receipt they will send an email to staff in order to seek their assistance in identification

• If you recognise the receipt you must respond to this email without delay

• If the Accounts team is unable to allocate a BACS and CHAPS payment, they will refer the matter to the COFA

• No member of staff should authorise the return of any receipt with the consent of the COFA

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Receiving funds from third parties

• Payments from third parties where we cannot verify the source of the funds or there does not appear to be a legitimate reason may be a warning sign of money laundering or terrorist financing

• If you are unsure about a payment from a third party, refer the matter without delay to the COFA

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Receiving money for a bill

• When you receive money in full or part settlement of a bill (or other notification of costs) you must advise the Accounts department accordingly and they will determine the appropriate process

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Withdrawals and transfers

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Client account withdrawals

• The Rules state when client money may be withdrawn from client account

• Client account withdrawal policy sets out our procedures and safeguards for withdrawing money on client account

• Internal deadlines for requesting a client account withdrawal – give as much notice as possible

• Money withdrawn from client account to pay our costs or disbursements must be done in accordance with our Receipt and transfer of costs policy

• The Accounts department will review balances on a daily basis to identify potential transfers from Client Account to Office Account in settlement of our costs.

• If fee earners are aware of funds received which need to be retained for settlement of third party disbursements they must notify the Accounts department accordingly and in writing.

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Client Account Payments

• When making Client Account payments we must obtain clear instructions in writing from the beneficiary confirming their bank details. We do not accept bank details taken over the telephone.

• You must send all supporting documentation to the Accounts team when making payment requests

• There are special rules which apply to ensure that the beneficiary’s bank details have not been fraudulently changed by a third party and that payments to solicitors have been independently verified using Lawyer Checker

• You must at all times comply with our policies on AML and CTF, Anti-bribery and corruption and, if relevant, Mortgage fraud prevention

• The procedures for making payments are contained in the document entitled ‘Processing Financial Transactions’ which can be found on the intranet

• Deadlines for BACS, CHAPS payments and cheque requests

• International payments

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Transfers between client matters

• We will always require written authority for a paper transfer of client account money from one client matter to another matter for the same client

• Fee earners should refer such requests to the Accounts department for authorisation before raising the appropriate e-chit ‘Client to Client Transfer Journal’

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Payments to Third Parties

Where we are required to make payments from Client Account to third parties fee earners should be aware that:

•They should have written instructions from the client

•The amounts payable should be agreed in writing with the third party in advance of the issuing of instructions on behalf of the client

•We will require cleared funds from the client in advance of issuing the instructions

•The third party must be included on our list of approved third parties and have therefore been subject to our approval processes

•We are unlikely to approve such requests for payment if the client has not settled all outstanding costs due to the firm

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Office account withdrawals and transfers

• Our Office Account is held entirely separate from any client accounts

• The Office Account represents the firm’s money and receipts and payments made require the authority of the COFA

• Payments from Office Account relating to client matters can only be made with the specific authority of the COFA

• Where fee earners consider that a payment should be made from Office Account for a client matter an e-chit should be prepared in the normal manner and submitted for authorisation together with an explanation as to why the payment should be authorised

• Transfers from Office Account will be made by the Accounts team with the authorisation of the COFA

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Delayed and amended cheques

• Notify Accounts team immediately of delay in sending office or client account cheques to intended recipient

• Return cheques requiring cancellation or amending to Accounts team

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The end of the matter

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Client money at the end of the matter

• Client money must be returned to the client (or other person on whose behalf the money is held) promptly

• If we need to retain client money at the end of a matter we must promptly inform the client of the amount and reason for retention. This position must be reviewed by the fee earner at the end of each month.

• We must provide this information when the money is first retained and then at least annually

• Residual balances

• Conclude matters expeditiously, close files efficiently and return client money to the correct recipient asap

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Closing client matters

• Client matters must be archived and closed on the accounts system as soon as reasonably possible

• Must not be closed until all client money has been returned and there is a nil balance in office account and client account

• Procedure for closing a client matter on the accounts system is set out in Compliance Manager

• Review your Matter Status Report

• Further information – Office Procedures Manual

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Summary

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Summary

• Duty to protect client money and assets

• Follow the Accounts procedures explained in this session when dealing with office or client money

• When you are receiving client or office money or are involved in withdrawals and transfers, be aware of our policies on AML and CTF, Anti-bribery and corruption Mortgage fraud prevention, Receipt and transfer of costs and Client account withdrawal

• You may be liable to disciplinary action if you fail to comply

• Report any concerns to the COFA

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Final comments

• Any questions?

• Email to nigel.harper@parfittcresswell.com

• Update your training records in Compliance Manager