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Publié par
Date de parution
01 janvier 0001
Nombre de lectures
0
EAN13
9781913226077
Langue
English
Poids de l'ouvrage
3 Mo
Publié par
Date de parution
01 janvier 0001
Nombre de lectures
0
EAN13
9781913226077
Langue
English
Poids de l'ouvrage
3 Mo
ACCOUNTS FOR SOLICITORS
Published by
College of Law Publishing,
Braboeuf Manor, Portsmouth Road, St Catherines, Guildford GU3 1HA
© The University of Law 2019
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any way or by any means, including photocopying or recording, without the written permission of the copyright holder, application for which should be addressed to the publisher.
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library.
ISBN: 978 1 912363 99 5
Typeset by Style Photosetting Ltd, Mayfield, East Sussex
Tables and index by Moira Greenhalgh, Arnside, Cumbria
Preface
This book is written primarily for the Legal Practice Course but it is hoped that it will be useful for others.
It is divided into two parts. The first part provides an introduction to business accounting. The second part deals with the accounts of solicitors and, in particular, the need to account for client’s money.
For the sake of brevity, the masculine pronoun has been used to include the feminine.
The authors would like to thank their colleagues at The University of Law at Store Street for their help in the preparation of this book, and College of Law Publishing for their support during the production process.
The law is stated as at 1 April 2019.
JACQUELINE KEMPTON LESLEY KING
Contents
PREFACE
TABLE OF STATUTES, RULES AND ACCOUNTING STANDARDS
TABLE OF ABBREVIATIONS
INTRODUCTION
Part I BUSINESS ACCOUNTS
Chapter 1 INTRODUCTION TO BUSINESS ACCOUNTS
1.1 Introduction
1.2 Keeping records
1.3 The nature of accounts
1.4 Users of business accounts
1.5 The role of accountants
1.6 Accounts and tax
1.7 Regulation of accounts
1.8 Information provided by accounts
1.9 Types of businesses
Summary
Chapter 2 DOUBLE ENTRY BOOKKEEPING
2.1 Introduction
2.2 The purpose of double entry bookkeeping
2.3 Principles of double entry
2.4 The form of accounts
2.5 Making entries
2.6 Cash and ledger accounts
2.7 Drawings
2.8 Trial Balance
Summary
Solutions
Chapter 3 FINAL ACCOUNTS
3.1 Introduction
3.2 The purpose of final accounts
3.3 The Profit and Loss Account
3.4 Balance Sheet
3.5 The importance of Final Accounts
Summary
Solutions
Chapter 4 ADJUSTMENTS
4.1 Introduction
4.2 The concept of accruals
4.3 Outstanding expenses
4.4 Payments in advance
4.5 Work in progress
4.6 Closing stock
4.7 Bad and doubtful debts
4.8 Depreciation
4.9 Revaluation
4.10 Disposal of a fixed asset
Consolidation exercise
Summary
Solutions
Chapter 5 PARTNERSHIP ACCOUNTS
5.1 Introduction
5.2 The nature of partnerships
5.3 Capital accounts
5.4 Profit sharing
5.5 The appropriation account
5.6 Current account
5.7 The Balance Sheet
5.8 Details of movements on partners’ current accounts
5.9 Partnership changes
5.10 Taxation of partnerships
Summary
Solutions
Chapter 6 INTRODUCTION TO COMPANY ACCOUNTS
6.1 Introduction
6.2 The nature of companies
6.3 Shareholders
6.4 Issuing shares
6.5 Maintenance of capital and a company buying its own shares
6.6 Debentures
6.7 A Company Profit and Loss Account
6.8 A Company Balance Sheet
6.9 Consolidated accounts
6.10 Deferred taxation
Summary
Solutions
Chapter 7 COMPANY ACCOUNTS: REGULATION AND FORMAT
7.1 Introduction
7.2 The role of regulation
7.3 Statutory regulation
7.4 Accounting principles
7.5 Accounts formats
7.6 Annual reports and accounts
Summary
Chapter 8 ANALYSIS OF ACCOUNTS
8.1 Introduction
8.2 The purposes of analysing accounts
8.3 Who will want to analyse accounts and why?
8.4 The limitations of accounts
8.5 What information do you need?
8.6 Preliminary steps
8.7 Some general considerations
8.8 Trends and ratio analysis
Summary
Solutions
Part II SOLICITORS’ ACCOUNTS
Chapter 9 THE SRA ACCOUNTS RULES 2019
9.1 Introduction
9.2 Principles governing the Rules
9.3 Who is bound by the Rules?
9.4 Client money
9.5 Client bank account
9.6 Client bank account must not be used to provide banking facilities
9.7 Paying client money into the client bank account
9.8 Keeping client money separate from the firm’s own money
9.9 Withdrawals of client money from the client bank account
9.10 Client accounting systems and controls
9.11 Paying interest to clients
9.12 Third party managed accounts
9.13 Dealings with other money belonging to clients or third parties
9.14 Obtaining and delivery of accountants’ reports
Summary
Solutions
Chapter 10 ENTRIES FOR RECORDING SIMPLE CLIENT TRANSACTIONS
10.1 Introduction
10.2 The two sets of accounting records
10.3 The format of the accounts
10.4 Dealing with receipts of money
10.5 Dealing with payments of money
10.6 Recording the firm’s professional charges
Summary
Solutions
Chapter 11 TRANSFERS
11.1 Introduction
11.2 Cash transfers
11.3 Inter-client transfers
Summary
Solutions
Chapter 12 VALUE ADDED TAX
12.1 Introduction
12.2 General principles
12.3 VAT and firms providing legal services
Summary
Solutions
Chapter 13 SPLITTING CHEQUES, MIXED RECEIPTS AND DEALING WITH BILLS
13.1 Introduction
13.2 Receipts partly of business and partly of client money
13.3 Dealing with bills
13.4 Revision of material in Chapters 9–13
Summary
Solutions
Chapter 14 MISCELLANEOUS MATTERS
14.1 Introduction
14.2 Receipt of a cheque made out to the client or a third party
14.3 Dishonoured cheques
14.4 Abatements
14.5 Bad debts
14.6 Petty cash
14.7 Insurance commission
Summary
Solution
Chapter 15 ACCOUNTING TO THE CLIENT FOR INTEREST
15.1 Introduction
15.2 The obligation to account
15.3 Use of separate designated deposit bank account
15.4 Use of general client bank account
Summary
Solution
Chapter 16 FINANCIAL STATEMENTS
16.1 Introduction
16.2 Layout
Summary
Solution
Chapter 17 ACCOUNTING PROBLEMS FOR SOLICITORS
17.1 Introduction
17.2 Number of ledger accounts required
17.3 Agency transactions
Summary
Solutions
Chapter 18 THIRD PARTY MANAGED ACCOUNTS
18.1 Introduction
18.2 Checks you should do before engaging a TPMA provider
18.3 Engaging with the client
18.4 The SRA
Summary
Chapter 19 COMPLIANCE
19.1 Introduction
19.2 Accountants’ reports
19.3 Storage and retention of accounting records
Summary
Part II Summary – Solicitors’ Accounts
Multiple Choice Questions
SRA Accounts Rules
INDEX
Table of Statutes, Rules and Accounting Standards
UK statutes
Companies Act 2006 61 , 68 , 73
Pt 15 (ss 380–474) 67
s 382 68
s 386(1) 68
ss 393–394 68
s 395 69
s 396 69 , 70
s 399 63
s 414A 74
s 415 74
s 423 68
s 426 68
ss 445–447 68
s 465 68
ss 475–476 68
s 580 55
s 610 61
s 658 56
s 690 56
s 733 62
Insolvency Act 1986
s 127 93
Mental Capacity Act 2005 94
Code of Practice 94
Partnership Act 1890 47
Solicitors Act 1974 158 , 166
s 85(2) 92
Value Added Tax Act 1994
s 4(1) 119
s 6(2)–(3) 122
s 6(4)–(6) 122
s 19(2) 121
s 25(2) 121
Sch 8 120
Sch 9 120
UK SIs
Companies (Receipt of Accounts and Reports) Regulations 2013 (SI 2013/1973) 68
Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/410) 70
Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008 (SI 2008/409) 70
EU
Council Regulation 1606/2002/EC 69
Rules and codes
Solicitors’ Accounts Rules 2011 90 , 158
r 14.5 92 , 93 , 94
r 20.3 96
Solicitors’ Accounts Rules 2019 89 , 89 – 101 , 90 , 103 , 132 , 158 , 193 , 194 , 197
text 201–3
r 1 91
r 2 91 , 100
r 2.1 91 , 99 , 148
r 2.1(a) 91
r 2.1(b) 91
r 2.1(c) 91 , 94
r 2.1(d) 91 , 95 , 144
r 2.2 91 , 95 , 145 , 197
r 2.3 94 , 116 , 134 , 143 , 148 , 197
r 2.4 95
r 2.5 95
r 3 91 , 92 , 100
r 3.3 92 , 94
r 4 91 , 100 , 101
r 4.1 91 , 95 , 137 , 197
r 4.2 95 , 96 , 136 , 139 , 140 , 144 , 145 , 148 , 149
r 4.3 96 , 116 , 135 , 137 , 145
r 5 100 , 197
r 5.1 97 , 134 , 136
r 5.1(c) 98
r 5.2 97
r 5.3 97 , 101 , 106 , 111 , 116 , 135 , 137 , 147 , 148 , 197
r 6 97 , 100
r 6.1 148
r 7 100 , 101 , 198
r 7.1 99 , 157 , 162
r 7.2 99 , 157
r 8 100 , 101 , 103 , 104 , 197
r 8.1 99 , 104 , 144 , 159 , 174 , 175
r 8.1(a) 98 , 111 , 147
r 8.1(c) 99 , 104
r 8.2 99 , 100
r 8.3 99 , 100
r 8.4 99 , 100
r 11 99
r 12 100
r 12.1 195
r 12.2 195
r 12.4 100 , 196
r 12.8 196
r 14.2(c) 97
SRA Code of Conduct for Firms 2019 90 , 95 , 96 , 100 , 194
para 1.2 157
para 5.1 153 , 157
SRA Code of Conduct for Solicitors 2019 90 , 95 , 96 , 100 , 194
SRA Principles 90 , 96
Principle 5 157
Principle 7 157
Accounting standards
Financial Reporting Standards 6 , 68
FRS 102 69 , 73 , 74
International Accounting Standards IAS 1 71
International Financial Reporting Standards 69 , 71 , 73 , 74
Generally accepted accounting practice
German GAAP 69
New UK GAAP see Financial Reporting Standards, FRS 102
UK GAAP 68 – 9 , 74
US GAAP 69
Table of Abbreviations COFA Compliance Officer for Finance and Administration COLP Compliance Officer for Legal Practice FRS Financial Reporting Standards GAAP generally accepted accounting principles HMRC HM Revenue and Customs IAS International Accounting Standards IASB International Accounting Standards Board IFRS International Financial Reporting Standards pa per annum PAYE Pay As You Earn REL registered European lawyer TPMA third party managed account VAT value added tax VATA 1994 Value Added Tax Act 1994
Introduction
WHY DO I NEED TO KNOW ABOUT ACCOUNTS?
The short answer is because a knowledge of accounting principles is a required element of all Legal Practice Courses. However, that does give rise to a further question – ‘Why?’ The answer to this question is that knowledge and understanding of accounting principles will help you enormously in your professional and personal life, in the following ways.
To deal with
