How often must a law firm reconcile its client account?
At least every five weeks under the SRA Accounts Rules, with the client bank statements, cashbook and client ledger total agreed and the reconciliation signed off by the COFA or a manager. A CLC-regulated practice works to the CLC Accounts Code instead: a reconciliation every calendar month, no more than five weeks after the last one and completed within seven days of the date it is prepared to. Either way, firms that reconcile monthly on a fixed date find the exceptions while they are still small.
What the rule actually requires
Three figures have to agree: the client bank statement balance, the client cashbook balance, and the total of the individual client ledger balances. The comparison has to be done at least every five weeks, and the reconciliation has to be signed off by the COFA or a manager of the firm — reconciling it and nobody reviewing it is not compliance.
The records have to be kept, and they have to be retrievable. "We do it, but not in a form anyone could inspect" is the answer that causes trouble.
If you are regulated by the CLC rather than the SRA
Licensed conveyancers work to the CLC Accounts Code, not the SRA Accounts Rules. The same three figures have to agree, but the timing is tighter and more explicit: a reconciliation in every calendar month, prepared to a date no more than five weeks after the last one, and completed within seven days of that date.
The sign-off sits with the Head of Finance and Administration in an ABS, or with an authorised person in other practices — the CLC's equivalent of the COFA. Reconciling items have to be reviewed and cleared promptly, and a shortfall has to be made good without delay.
The Code is explicit that monthly is a minimum and that reconciling weekly or daily is encouraged. Most conveyancing firms we work with reconcile far more often than the Code requires, because completion money moves quickly.
In practice
Five weeks is a maximum, not a target. Firms that treat it as a monthly routine — same working day each month, same person, same checklist — find unpresented cheques, residual balances and mispostings while they are a five-minute fix.
The reconciliations that go wrong are almost never wrong about the bank. They are wrong about the ledgers: a receipt posted to the wrong matter, a transfer made before the bill, or a small residual balance left sitting after completion.
Common mistakes
Signing off a reconciliation with a difference "to look at next month". Differences don't improve with age, and an unexplained one is the thing an inspection will start with.
Leaving residual balances to accumulate rather than returning them promptly.
Letting the person who does the posting be the person who approves the reconciliation, so nothing is genuinely being checked.
Related questions
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