ICAEW have now published the updated guidance to Reporting Accountants following the implementation of the new Accounts Rules in November 2019.
The Technical Release (TR), which has been discussed in detail with the SRA, is intended to be complementary to the SRA’s own guidance note.
A few key points to note from the guidance:
- The TR is an update of the previous version. Despite the implementation of new Accounts Rules, wholesale change in the work done and reporting by the Reporting Accountant is not expected. However, it is recognised by ICAEW and the SRA that both the guidance to reporting accountants regarding key areas of work and the circumstances in which a report might be qualified will continue to evolve;
- Firms need to ensure that their terms of engagement are properly up to date for work done covering any part of an accounting period that falls after 25 November 2019. Regardless of the accounting period the most up to date version of the AR1 should be completed - split reports for ‘old rules’ and ‘new rules’ are not required;
- Due to the principles based nature of the rules and the link into the broader regulatory framework for law firms, Reporting Accountants should have a reasonable understanding of key areas of the SRA’s Codes of Conduct (for individuals and for firms) insofar as they impact the safeguarding of client money;
- The Appendix to the TR includes revised and additional examples of breaches that may arise in practice. The guidance considers whether they may or may not be considered to be reportable, either as part of the whistleblowing regime or in a qualified accountant’s report. However, it is always ultimately for the Reporting Accountant to make the judgement.
Account rules
The TR does not directly deal with the changes to the Accounts Rules themselves, as this is adequately covered elsewhere. Experience so far has been that the vast majority of law firms have ‘adopted’ as many of the 2011 Rules as allow for continued compliance, making only a few ‘tweaks’ and necessary changes – for example when operating a client’s own account.