Hello, everybody. And welcome to this webinar on the new Solicitors accounts rules 2000 and 19. We're going to be looking at the following today. An introduction to the new rules new rules framework and a focus on risk changes to the definition off client monies. Residual client balances on banking role accounting for interest systems and controls. Client account reconciliations dealing with other money belonging to clients or third parties. Important omissions on the conclusion. What you should do now after watching this Webinar. My name is Robert Blacks. I am a director off MH A. McIntyre. Hudson and I specialize in the sisters accounts rules on dull the accounting matters relating to solicitors and law firms. So if we start moved the introduction, the new solicitors accounts. Rules come into effect on the 25th of November, 2000 and 19 on all firms are expected to comply from that day. There's no bedding in period. So up until the 24 7 November 2019 law firms are expected to comply with the existing rules. But for midnight on the 25th of November, the new rules come into effect. So from us as an accountant. We are expecting that law firms will have in place systems and controls which she shall have have a look at in a minute which comply with the new regime from the 25th off November on the 20th of March 2000 and 19 TSR Ray in a new release stated. To help solicitors and law firms prepared for the introduction off the standards and regulations, we will publish a range of guidance over the coming months. Initial documents will cover areas such as the accounts rules. Practical application of the principles on which type of firms in individuals need authorizing new guidance on the rules has come out really over the summer. July and August of 2000 and 19 on the main policy are split into six main sections. Those sections are the accountant's report and the exemption to obtain one don't need to operate a client's account. There are now situations within the new rules where firms may not have to operate a client camp, helping you keep accurate Klein accounting records. This is a really important aspect because as everything as we will see is now on self regulation and outcome focused resource management This is really a crucial piece of guidance, joint accounts and record keeping planning for and completing the accountant's report. Andi Third Polity managed accounts. There was a new section within the rules on keeping 1/3 party managed accounts in certain situations on This is something which we will have a look at it a bit more detail later off. So if we break down the overall structure of the new rules and compared them to the current or the existing rules on, there are some significant differences on, and one of the ways of looks that this is is it a four match or just highlights? So if we compare that the new any existing roles, we come across the following observations. The old rules are, on average, 44 pages long rows. The new rules are depending on the print layout between 7 to 9 pages long. There are 53 rules in the existing. The old rules bills have A's and Roman numerals. Andi have been additions since 2011 off changes to these roles. Where was in in the new rules were down to 13. Obviously they have some A's and B's Roman numerals as well. But just comparing the tomb like toe like that means has been a reduction off 40 rules. In effect, 40 rolls have been called from the current to the new regime, and that is quite a reduction that the current rules include very detailed, prescriptive obligations. You must do this. You must do that on. There were time frames for doing so. For instance, as an example, the current of the old rules state that you must transfer any officer money which has been earmarked in is in the client account over to the office account within 14 days. The new rules have no time frames in place on the language is different in certain aspects as well, so you'll see the words ensure a lot. Nevertheless, Onda other language where it puts the onus very much on the firm's to decide what they're going to do in their time frames while there then strict adherents to the timeframes as is in the existing world and all the counts issues could be found within the old rules. So almost anything from what to do if you get an S r a investigation. What documents a. An accountant should put in their letter of engagement to the client full of these and many more of in the the existing yelled rolls, raising the new rules. We only see aspects reach the S r A. Consider important, so the important aspects is still there. But there has been much removed. In another update in 2018 in autumn up day, the SRE stated that it is essential that firms, regardless of size of makeup, have the right systems and controls in place to protect client monies and maintain public trust in the profession. Andi, they went a bit further to state their client. Money is at risk if there are few controls on who can access the client account, there are limited controls within an accounting system, and staff are not trained. How to keep money safe from potential threats, such a cyber attacks or other fraudulent behaviour. And these are key areas that firms now need to or should already but certainly now have to comply with in order to make sure that their client money is not at risk and that is dependent on controls. So if there are only a few controls potentially, there are issues there. There's a limitation of controls. Limited controls on dstets are for not trained on. The three of those combined really can cause issues in turn, terms of compliance for the safety off client money. Much of these controls Andi training is based on risk, so firm should be doing your risk assessment. Now. Risk is is based on two factors. First of all, there's the firm risk on, but there's also sector risk as well. So the firm risk, as we have just seen, is going to be very much dependent on the controls, a level of supervision, segregation of duties, training that that is in place on the better. All of those, then potentially the less risk there is. But risk is also sector driven as well, so firms, depending on what legal sector they work him are goingto have varying degrees of sector risk as well. So, for instance, those who are involved in family or criminal work potentially may have less risk than those in probate, where, in a program matter, firms are holding often a large amount of money for a long time. So these are considerations breaks a sector in the firm that that should be looked at when defining the risk of any organization you will find dependence one rich, all the rules, the new rules. And then you will also find at the back in appendix full the guidance, which I referred to earlier on, which fits very much into the rules themselves. Um, the new rules are divided into four sections, so we have Part one, which is defined as the general part, which looks at the application of the rules and who is authorised by them. Part two Richard the chunky ist off the four sections on that is to do with client money. Andi accounts on that looks at the definition of client money's the need to maintain the client account payments and re drools from the client account systems control bank reconciliations interest another matter, such as duty to correct breaches upon discovery. Much of these are obviously crucial, and includes is in the current, the old rules. But there has been some changes we will look. Actually, Part three of the new rules is dealing with other money belonging to clients or third parties. So this looks that joint accounts operation off the client's own account than on third party managed account, which I referred to a little earlier apart for is the accountant's report and storage and retention of records. So this looks at whether, in accounts and support is needed, who can prepare an accountant's report on storage and retention of records and have been some small changes which we will look at. So the new rules, the framework for the new rules and and rule one is what we're going to look at now. Andi, the rule one, which defines who is authorized by the new rules, are in effect, who the new rules are applicable to unroll. One says that the new rules are applicable to authorize bodies, managers and employees, so by authorised bodies remain the company, the LLP, the partnership managers, we mean the owners effectively of the business. So directors of a company members of the NLP partners in a partnership for the sole trader and employees are people who work within that authorized bolty on day. One of the important things to note is that managers are joint and severally responsible for compliance by the authorized body. Is managers employees within the rules and that is an important aspect with your owners of the of law firms should taking to account. It doesn't say anything within the new Urals about non manager Cof fers. So in certain situations a firm will have outsourced or have a non employees as the Cofer um, the current SRE Hamburg states that the Cofer must be of sufficient seniority in a position of sufficient power and responsibility and clear reporting lines, which we understand will be the same going forward. And this There's some notification otherwise. But remember that they are not a substitute for the firms and the manager's responsibilities, and they take ultimate responsibility for compliance within the rules. Hard to of the New Sisters Account rules defines client money and in rule 2.1, it states the client money is money held or received by you relating to regulated services delivered by you to a climb on behalf of 1/3 polity in relation to regulated services. This is subsection B delivered by you, such as money held as agent stakeholder or held to the centers orders 2.1 sees state as a trustee or as a holder of a specified office or appointment, such as Dhoni of a power of attorney, Court of Protection, deputy or trustee of an occupational pension scheme or 2.1 D in respect of your fees and any unpaid dispersement if held or received prior to the delivery of a bill for the same, just pick up on the words regulated services under 2.1 A and B. The reason that regulated services have been put in to this rule 2.1 is that in order to avoid solicitors acting as bankers again, a topic which we shell the cat shortly if you are holding client money does have to be for a regulated activity that a law firm intensity sisters should be undertaking to. Key change within Rule 2.1 is 2.1 day, which, if you just recall that we just stated their client money is money held or received by you in respect of your fees or any unpaid dispersement. If held or received prior to delivery of a bill for the same key change is prior to the delivery off the bill. This will have an impact, particularly with regard to unpaid disbursements. So in certain situations, firms may, um, charge out this businessman so that paid for the disbursements was just sitting as a debit balance on their office account on they are perfectly entitled under the existing old rules to transfer that money across some kind account. Um, where they are in effect, owed that money. But under the new rules, this is prior to the delivery off the bill Onda. Also within the new rules, there is no separation between professional and unprofessional dispersement. Andi, for those of you like me who have studied the existing yelled ruled in great detail over the years, one of the key element on the areas which have taken quite a lot of getting used to and learning is what to do. Um, we're leaving with professional and non professional fees on what counts is client money and non client money. So with this difference, the new regime under 2.1 day the delivery of a bill is the key enemy in in the definition off climb money. So firms are gonna have to look at how this will effect their billing policy. And also they cash flow affirms gonna raise disbursements just for sorry. Affirms going to raise bills just for small dispersement. Um, you know, remember, under the old rules, 12.7 derail. Unpaid professional disbursements. Always client money. Um, this is a very interesting topic on aspect. Within the new rules on, we will have to see how this developed. And I will come back to this in a second memory. Look at the firm's money. So if we have a look, can we just skip a second to route to rule for the reason I called it the firm's money is that within the new rules, there is no mention any rare off office money or office accounts. The terminology has has changed. Rule 4.1 says that she keep client money separate from money belonging to the authorized body. The authorized body is effectively the firm's money and his Air Force office money on 4.2 D states that you ensure that you allocate promptly. Any funds for mixed payments you receive to the correct client account or business account business account meaning officer camp. You'll see the words allocate promptly. Um, under the existing rules, the old rules there are quite detailed obligations what firms need to do where mixed payments are concerned. So for instance, the whole the money would go into the client account, and any office monies would happily transferred out within 14 days or, if the money went into office, account them. By the end of the second working day, the client money had to be removed and paid out off to the client camp Male. When we go back to the systems and controls and self regulation, it is up to the law firm themselves to determine hell. They're going to deal with those mixed payments. Eso That should be a system control of procedure about what they do with mixed payments. Now there could be that they follow the your with existing rules the same mrs as they are doing now. But I would have to be documented in order to ascertain that is what they are doing during back to rule, too. Um, we're now going to have a look at one of the real key issues within not only the new rules, but within the current rules as well. When it is residual balances, residual client balance sees Rule 2.5 states that you ensure that client money is returned promptly to the client or the third polity for whom the money is held as soon as there is no longer any proper reason. Toe hold those funds. So the key area, the key question there is what is proper reason When should those funds be returned? And once a matter has been concluded on, there was no longer any work to do on that matter, unless for any other particular reason, those firms should be returned. And it's important to understand that you can't solicit a phone. Can't hold that money because they anticipate that the clients going to instruct them on another matter shortly. So just said, You know what? Hold that. There has to be a genuine reason of ongoing work, why the firm would continue to hold that money and under the existing older rules, 14.3 and 14 point for our farm or detailed on this matter. Onda Current rule or existing rule 20.1 K and 20 point to cover the withdrawal off talent is under £500 gaining authority from the S R. A for payments over £500. Estates that they need to keep records of steps taken on ability to pay money to charity, where the client can't be traced now that is not now specified within the rules. Um, but if you have a look at Appendix three, which you'll find with the with the notes, it stays within the helping you keep accurate and accurate client accounting records. The ethics guidance note that there should be systems which make sure clients or other people on whose behalf money is held or kept regularly informed when funds are retained for a specific reason. We should be in respect of the delivery by you of regulated services at the end off a matter or the substantial conclusion of a matter. And that's quite important. Tiu Tiu Have a look at Andi to understand, but I refer Teoh Appendix three, just before what Appendix three states is. The is the £500 roll limits that was in existing roles, which is no in the rules but is now within UM, a. A note, which a guidance note which the SRE have issued is actually no guys with next a policy statement. So that policy statement states that the £500 effectively is going to continue. So if you're under £500 your residual parents. You don't need to get the authority for near. Sorry if you're over £500 or the residual balances over £500 then post the 25th off November. You still need to get the authority for near Sorry to pay that money to charity. We just had the look at residual balances, which is a key area CSR have defined. Within the new rules, we're now going to look at another key area. We're going to go to Rule 3.3 of the new rules, which is the banking. So this is to issue so this it is acting as bankers. Under new Rule 3.3, it states you must not use a client account to provide banking facilities to clients or third polities payments into on transfers or withdrawals from a kind account must be in respect to the delivery by you of regulated services. Let's compare that to the old existing rules 14.5, which looks of banking and say so. Foolery. Rule 14.5. You must not provide banking facilities through a client to cam payments into and transfers or withdrawals from a client account must be in respect of instructions relating to an underlying transaction on the funds arising there, from all to a service for me part of your normal regulated activities. Let's just have a look at the difference between those two. First of all, you'll note that under the old rules, it says, forming part of your normal regulated activities, where is under the new rules, it states must be in respect of the delivery of you by regulated services. So we're comparing regulated services under the new rules to regulated activities under the older rules, and you were probably take on board that regulated services are definitely a more stringent definition than that regulated activities, So that is the first difference. Secondly, under Rule 14.5 of the old rules, it states that you must, ah provide banking facilities and transfers from a kind. Transfers from McConnell camp must be in respect of instructions. Under the new Rule 3.3, the word must be irrespective instructions of the world. Instruction does not appear, um, anywhere. That's probably because off, irrespective, whatever you have been instructed to do that my client, if the money that you are holding falls into the definition of a sinister acting as a banker electing the banking facility, Then the fact that you have been instructed to do that all know becomes irrelevant. Onda. The the other thing to bury mind is, is if we just have a quick look at the instruction element and underlying transactions um, the S R Ray, Now consider that it's irrelevant whether there is an underlying transaction or no. So under the new rules, the words underlying transaction doesn't exist. Where is it did under the under the old rules on. But if we look at an issue such as rent deposit accounts, commercial climb in deposit accounts that this is a matter which over the past few years has caused a wave of activity and guidance from from the S R a. Andi. Historically, conveyancing firms have held commercial in deposits on behalf of attendant to their client, who is often the landlord off their property. And this has been seen by the S. R A. As as veering onto the banking sigh. So sisters acting as bankers, one of the arguments balls that well, there's an underlying transaction might be in the deed, but But there's an underlying transaction. Where was now the words underlined transaction of Gone on diff There is not ongoing regulated services that are being conducted by the solicitor and the sisters firm, then potentially wonderful. Fail of the banking. So I was far was commercial and deposits are concerned. This is something which firms who maybe have or are holding commercial deposits need to consider extremely carefully. In August 2000 and 18 yes, are a I'm issues some guidance on sisters acting as bankers, Andi issued the client banking warning notice on that looks at various areas where there is some danger of solicitors. Acting as bankers on one of those was to do with, um, commercial rate deposit account on commercial rent deposits. Accounts per se are not sit is acting his bankers, but depends on what the firm is during in regard to holding them. Is there a regulated service? So, for instance, where they are holding them and are maintaining, you know, dilapidation, zor repairs as part of holding that rent deposit, then that potentially were not full fail off the banking. But these were all clearly stated within that the banking warning notice on gone the slides which accompany this webinar the weapon ing today his is given Andi. I would urge all of you to have a detailed read of there and to make sure that the work you are doing complies with solicitors, making sure that they don't act as bankers. And there are other examples on there apart from rent deposit. It's a really good and important I'm piece of material that you should read just before we move away from banking. Everything which I said which compares the old rules to the new rules, is set out in Appendix two, which accompanies these that slides Andi areas to the cats, where new comparing Rule 40.5 under the old rules every 3.3. Under the new rules, you can see the differences which we have looked at when comparing the two. But I can't emphasize enough the importance or search distracting as bankers Andi ensuring the sisters only dealing with the regulated services which they are undertaken to conduct Two sisters are not regulated as banks. Um and therefore firms have to be very careful with with holding money. As I say, the warning notice on that should definitely be read. We're now going to have, um, look for what we're doing is we're We're concentrating on some of the areas where there have been changes within the rules and we're going to move on to rule 7.1, which is accounting for interest. So rule 7.1 under the under the new accounts rule states your account to clients or third parties for a fair sum of interest or any kind money held by you on their behalf on Rule 7.2 follows on from there by stating you may buy a written agreement. Come to a different arrangement with the climb or third party for whom the money is held as to the payment of interest, but you must provide sufficient information to enable them to give an informed consent. So going back to 7.1, your account declines from a fair sum of interest or climb only helped by you. What is the definition of a fair sum of interest now, as we sit here in late 2000 and 19 affair some of interest in a lot of matters that solicitors on to take his probably or may well be nothing but you have to recount to the client to inform them that in situations that you are holding client money, that what your policy is potentially with regard to paying out interest. So that policy, maybe, that if you're holding interest, which is, Esten asserts in the mail, maybe £20 etcetera onda length of time that you're holding that money that she won't payout Klein interest. Onda clan has to agree to that. There might be in a client care letter in the terms on conditions The rule doesn't say per se that you need a policy, but to is important that you account for with the client you with a fair sum of interest. You may have a policy in place in all the torrential that you conduct your business in a fair and justifiable Why, um, but that is quite different to the old rules. Existing rules, Because if you have a look at Rule 12.7, subsection D is states. The office money includes interest on general client accounts. The bank or building society should be instructed to credit such interest to the office that camp. So many firms will have, um, general client account where the interest, as in the old rules, would be credited to the office account. They then may have where they where. There is more substantial individual matters such as profane matters, a designated client account where the interest will get credited to the account and is attributable to the climb. Now what I am, what you will see is that having for it Rule 12.7 D under the elder ALS doesn't apply anymore. So you can't say, Well, I'm keeping interest on the general current account because it says so on to the services of camels because from 2015 November, that won't be the case. So, as I say to this important, you account to clients your policy affair some of interest, which are many occasions on matters, maybe zero, but it might not pay on. What is important is that firms have the correct checks and procedures within accounting software, where if their policy, for example, is £20 that they are able to see when the money, when the interest runs up to that £20 or when it goes over that £20 it's important that the processes are are in place, so they comply can comply with their own room. So many accounts systems will have an ongoing for each major interest amount. But it's important that that that that firms money so that so that if they do breach the payment of interest to rush old, that interest is accounted to to the client. Otherwise, they will be in breach off roll 7.1 a za rule 7.2 states You may buy written agreement. Come to a different arrangement again. You may have one one climb where there may be a different interest arrangement. Um, but again, you must provide sufficient information to them and they must be able to make an informed consent. We're now going to look at systems and controls on this is covered by Rule eight. Within the new rules, will 8.1 state you keep him? Maintain accurate contemplating gnaeus and chronological records to 8.1 a record inclines ledges identified by the client's name andan appropriate description of the matter to rich. They relate a one subsection one. All receipts and payments, which are climb money on the client side of decline ledger account to all receipts and payments, which are not climb money on bills of costs, including transactions through the authorised bodies. Accounts on the business side of the client Ledger account. 8.1 b Maintain a list of all the balances shown by the client Ledger accounts of the liabilities to clients and their party with a running total of the balances on a 0.1 C states provide a cash book sharing a running total of all transactions through kind accounts held operated by you Andan on this an honest day on firm should be doing there under the Elwood existing rules. Anyway, this is just packaging this up and ensuring the firm's. Or during that you will see I'm having a look at 8.1 um A. To when it refers to receipts and payments which are not climb money it speaks about including transactions through the authorised bodies account on the business side of the kind ledger account that you emanate from before the term office. Money's office account doesn't exist anymore, so we're using the terminal of terminology. The authorised bodies account on the business side of the client camp, so I can't emphasize enough ensuring that systems and controls are off look, tack really dealt with finding and ensure that you have complying with the new rules because under the new rules, you have to have the systems and controls in place to comply with them, which is different. Thio Thio The old rules were in effect. There's a reversal off position on dinning in the introductory section to the to the new rules, it states. Firms will need tohave systems and controls in place to ensure compliance with these rules on the nature of those systems must be appropriate to the nature and volumes of client transactions dealt with on the amount of client money held or received. This, um, is really important. Remember, you look at client accounts and the money that is being held there is an exception now, where in certain situations, firms do not have to operate a client account. So under Rule 2.2, it states under the new rules state in circumstances where the only money were the only client money you hold or receive falls within 2.1 D above and in 2.1 day it's a it's a kind Money, as we looked at before, is money held to receive by you in respect of your fees or any unpaid dispersement or held or received prior to delivery of a bill for the same. So if the only money or the client money that the firms are holding, it's for use of any unpaid dispersement and any money held the dispersants relates to costs or expenses incurred by you on behalf of your clients and your occurring knows, um, disbursements for ritual liable. And you do not for any other reason maintain a kind cam. You're not required toe. Hold this money in a kind account and if you look further a 2.2 and you have to form a kind of how the money will be held on and say some rules that do not apply within the new rules. But again, firms may take up the option, but they have to be careful about during that. Remember that there is protection of holding money within a client account. And if you don't, um, hold that money being declined account. Nero. You know, protection issues to the clien if the firm of the company goes interpretation, etcetera. But But there are There is Israel to point to where a client account does not need to be kept, but you have to have other systems and controls in place to make sure you are complying with the rules. For instance, you must only maintain their client account a branch or bank or building society in England and Wales. And you have to be sure similarly to the same is actually do. Now that any client account has the name of the the authorized body, i e. The firm and he must have the word client, as it does now and then that is shown in table 3.1 and three point to, um, And again there are controls and procedures Aziz you really expect in regard to withdrawals from the client account Thes air covered by Road five Andi. I cover these in this area as political systems and controls. So from 5.1 states your own individual client money from a client account A. For the purpose which is being held, be following receipt of instructions from a client of the third party for whom the money is held or see on the SRS Prior, written in authorization or in prescribed circumstances that might be a situation as we looked earlier, where they give you a militarization to pay money out on a residual balance on a roll for 5.2 states that you appropriately authorize and supervise or withdrawals made from my client accounts again coming back to to the aspect of systems and controls, making sure that you authorize and supervise any written rules. Rule 5.3 states that you only redraw client money from a kind account if sufficient funds are held on behalf of that specific client or third party to make that payment. And under Rule 6.1, which deals with the duty to correct reaches upon discovery, you correct under six by one, you correct any breaches of angels promptly upon discovery, any money improperly withheld or withdrawn from a current account must be immediately paid into the account of replaces appropriate. Now, I've been speaking during this weapon our about the language in our ensure, etcetera. But this is a situation where if there is money that is improperly withheld or withdrawn, my client account, it must be immediately repaid. Um, I'm just gonna go back to one aspect which we touched on earlier, which was about a month, the delivery of a bill on and making sure again. Now that you've got your controls and procedures in place on at once that release delivered, um, that money, it is no carry on being always know anymore. Client money. Andi under rule 4.3 when he talks about climb, money being kept separate from the also rise bodies Money EC states that where you are holding client money on some or all of that money will be used to pay your costs. I e. Your fees plus dispersement. You must give a bill of costs or other written notification of the cost incurred to decline or the praying quality very much the same is in one day on. This must be done before you transfer any client money from a client account. To make that payment on any such payment must be for the specific some identified in the bill of costs or other written notification of the cost incurred and covered by the amount held for the particular client or third party. So where was in 2.1 day? It's also about delivery of a bill in the 4.3 a it speaks about a bill of costs or other written notification of costs. Um on have been many questions Arts asked about what does a written notification, of course. Look level. Does it mean Can I put something say on my client care letter with regard to notification of costume regard to disbursements? But I think the key to take away is in 4.3 C, which states that the payment must be for the specific some identified in the bill of costs of other rich identification. Of course, so you can't have a general line or something in the client care letter, which related disbursement. It's got to be for the specific some identified. I think that's just the unimportant aspect to my mind now. One Teoh client bank reconciliations on, and this is covered by Rule 8.2. Rule 8.1, again looking at the systems and Controls speaks about maintaining concert premise, metallurgical records except, um which, which again we've had a look at a rule 8.2 is really one of the most important rules within the new the new 13 rules I'm on, which I feel very strongly about because a kind as ever reporting account by looking at a condo kind of reconciliation. You can tell so much. So many of the breaches are prevalent within climate camera considerations. If it firms not doing things properly and therefore you know Nasr a started inquiry one. The first thing they will look at will be the last climb. Account reconciliation. Several 8.2 states that you obtain at least every five weeks. Statements from banks and building societies and other financial institutions for all client accounts on business accounts held or operated by U 8.3, you complete at least every five weeks. All kind accounts held are operated by you. A reconciliation of the bank or building society. Statement. Balance for the cash book Balance on Decline. Ledger Total A record of rich must be signed off by the code for or manager of the firm. A mess imported must be signed off on. You should properly investigate and resolve any differences shown by the reconciliation in that is key to promptly investigate and resolve and roll 8.4. You keep readily accessible a central record of all bills or other written notification of costs given by you. The new rules specify that the reconciliation must be signed. Is the person who signs off to reconciliation? Are you the co. For whom essential differences are investigated on results? So if there is an issue in January's reconciliation, it shouldn't still be sitting there. Have been signed off by the cone from February, March April, etcetera should be investigated. The result. The old rules are much more concerned on sharing that the cause of the differences Andi its key within the new rules that promptly investigate and results are key terms which, or firms should should take very seriously on the guidance notes. Mature in Appendix four. Give more information on bank reconciliations on also within the guys and say under the ethics guidance, knows it talks about the COF FERS responsibilities. Protecting client bank reconciliations from people accessing number. Shouldn't having pulse words. Onda also detailed what system should be able to produce on the bank briquettes Ignition. That's really important. If you're not aware of that too, we're now going to move on to part three of the rules which is dealing with other money belonging to clients off the parties were just gonna briefly go through this. So if when This Israel 9.1 operation of joint accounts well, 9.1. If when acting in their clients matter, you hold a receive money jointly with the client or third Polity. Part two of these rules, remember Part two is is the deal with the client. Money definition etcetera does not apply, say, for raw 8.2 receiving statements from banks, building societies, another financial institutions. I'm relate point three reconciliation. So you have to produce reconciliations on it is specifically not specifically mentioned under the old rules on a point for giving a bill and notification of costs. Again, there's MAWR. There is more guidance on this in independent floor at the back. Rule 10 which is operation of kinds Own account Rule 10.1 If in the course of practice, your operator kinds own account a signature part. Two of these rules against not apply, say, for the same eight 0.28 point three and 8.4. So statements from the bank or building society reconciliations Andi billon notification of costs. So again, the new rules specify that these reconciliations must be done when we come on to rule in Evin, which is their party managed accounts, which is a big, big topic. Big New Area which is bolting to under the new rules on Discovered by Rule 11 rule 11.1 states. You may enter into arrangements with a client to use 1/3 party managed account for the purpose of receiving payments from the half off or making payments to on behalf of decline in respect of regulated services. Um, delivered by you to the client only if 11.1 I use the account does not result in you receiving or holding the client's money and b you take reasonable steps to ensure before accepting instructions that the card is informed and understands. Subjection won the terms of the contractual arrangements relating to the use of the third party managed account, and in particular, how any fees for use of the third party managed accounts will be paid and he will bear them. Onda Subsection two, the client's right to terminate the agreement and dispute payment request made by you. Under Rule 11.2, you obtain regular statements from the provider of the third party manager account and ensure that these accurately reflect all transactions on the account. You have to remember that using a certain party managed account means that these funds are not treated as coin funds and ill treated his client money so potentially, if all declined money was put into 1/3 party managed account may not need a accountant's report. But, you know, holding any client money on what we have now is client money. You also relies. Firms also has bought your loyalty by firms money, and then we have third party money. This is different from the old rules rhetoric. Well, 12.1 a. Stated the client money YSL other money, which is no office money. So we have separate section now off definitions of client money on contractual arrangements went their party. Manage accounts are suitable. Vital andan this question who were regulate these Often these are subject to other regulatory requirements of that is something the firms that have to look at on. We spoke before about the commercial rent deposit accounts on this could be a situation where the money will be kept into a potentially 1/3 party managed. But another question is, how easy are these accounts to set up Certainly from my experience, setting him up with the bank has not been too easy. There are organizations who will set up these accounts for you, but it's interesting. 11.2 It says that you have to. Her statements provided wouldn't say if the reconciliations says interesting. TOC What records need to be kept again? I would urge you to read the third party manager count sections in the guidance notes which independence for it actually slides because that they tell you things about the SA. Raise expectations with the girls. The third party managed accounts the tech checks you should make before engaging a provider. Andi, you know what you need to tell clients section on. I would urge you teach. That's just going Teoh not going to go into detail on this, but Rule 12 on feel specifically with obtaining and delivery of an accountant's reports. You have 12.1 along the way through to 12.9. Much reduction toe what he's in the existing. The gold rules about attaining and accounts into poor Andi obligations about the account on the phone. Um, at the moment a cease to hold report that is a report where other firmas clothes or has been the change of legal entity needs to be submitted to the S r. A. Regardless of whether it is qualified or not, that changes under the under the new rules. Um, where it states and I'm just going Teoh, find the rule under 12.4 the s r A. May require you to obtain and deliver an accountant's report to the S R a. Unusable notice if you ceased operators motorized body or toehold operator, climb account all the sorry considers that is otherwise in the public interest to do so Onda Also there, under the current rule, the old rules, it states quite specifically will had Klein. What a sorry an accountant to put in a letter of engagement to a law firm where was 12.7 The new rules just a CSR a may specify from time to time matters that you must ensure incorporated term terms on which an account in his engaged rule 13 30 point months storage and retention of accounting records you must store all the county records security on retaining released six years. Three Key to this is securely on day securely. I'm suspecting for making sure people should access them, who are allowed to access them. But they kept securely in fireproof property, room's or storage facilities on third site. But you can get access to when needed in a secure environment. We're just going to have a look at some emissions under the new rules of things important things which are not in the New World. Power and Neil Existing rules Legal aid monies has now been removed under the old rules. There are specific obligations on legal aid firm, legally aided firm. Several 19 timeframes dispersement recruitment, a phase recommend of costs where they have been paid twice, for instance, that no longer is included under that. Under the new rules, there's no mention specifically on suspense accounts, although in the Guidant knows that the back planning in completing on accountant through Portis states of where suspense accounts are used, they should be for temporary items only. Such a zone i unidentified receipt. There was no details on the new rules of producing documents on information when yes, are a monitor investigator firm, nothing on liquidator and trustees in bankruptcy under the old Rule eight. Remember the office money is a terminology. Office monies no longer exist. So office monies I've changed that. There's no longer that the use of the wording of office money's within the new rules. So that's a very brief our webinar on on the new rules. So the question is, once you've digested, listen and you know there are areas which I haven't covered everything. This webinar is a brief outline on, and I suspect that has a new rules come into play. There will be additional guidance on and interesting articles coming out about how some of the interpretation of the rules have been defined. But what should you do now? So you should ensure you understand the basis of self regulation and self reporting, as we see much of this is based on on having the systems and controls in place and having the correct personnel and systems in place. So it's really important you understand this. Therefore, we should update your client care letter on, and I'm going on from the review your systems and internal controls wherever appropriate to make sure they comply. Going forward documentation is key documentations everything without documentation. Um, if I going is reporting accountant, I can't tell whether you have complained of your own procedures. Remember, the old rules are no longer going to be in force, so you have to have your own procedures in place and they should be documented. Review your billing policy on the change two disbursements treatment go through Residual balance is really key area. Um, make sure on a regular basis you are You're looking through anything which will be deemed as a residual balance. And, sure, you have accurate and relevant management information. Remember the impact of third Polity accounts and red deposits were discussed? Um, one thing we haven't covered, but it's really important for me to stay his look at the firm's trading entity. How are they trading under Under, You know, a partnership soldering that LLP limited company. Have a think about that and every think about succession are not only succession off the you know, the partners or directors, but succession off the accountancy side of things as well. The bookkeeping. You know what provisions have you got in place If your bookkeeper or your finance department not there retired, resign. It's really important you have those processes in in place and consider having SRE health check out here. McIntyre Hudson. We do a compliance health check publicly assistance and controls and make sure that you are compliant going forward on areas that you may fall short on compliance. We will write a report, identify those issues and help you going forward to ritual you out for the compliant when his Robert Blech thank you very much for watching.
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