How Often Should Solicitors Reconcile Their Client Account
Client account reconciliations are one of the most important financial controls for law firms. They ensure that client money is properly protected and accurately recorded. The Solicitors Regulation Authority (SRA) requires regular reconciliations to maintain compliance and to detect any discrepancies early. This guide explains how often solicitors should reconcile their client accounts, what the SRA rules require, and how to implement effective reconciliation processes.
Introduction
Under the SRA Accounts Rules, solicitors must keep client money separate from office money and maintain accurate accounting records. Regular reconciliation of the client account ensures that client funds held in the bank match the amounts recorded in the firm’s ledgers.
Reconciling on time not only fulfils regulatory obligations but also provides an early warning of accounting errors, unauthorised withdrawals, or missing funds. Failure to reconcile properly can lead to breaches of the Accounts Rules and even disciplinary action.
What the SRA requires
Rule 8.3 of the SRA Accounts Rules states that solicitors must:
Keep accurate and up-to-date accounting records for both client and office money.
Reconcile the client account bank balance with the client ledger and cashbook balance at least every five weeks.
This reconciliation must be documented, dated, and signed off by the compliance officer for finance and administration (COFA) or another authorised individual within the firm.
The five-week limit is a maximum, not a target. Many firms choose to reconcile more frequently, such as weekly or even daily, to reduce risk and maintain tighter financial control.
Why client account reconciliations are essential
Reconciliation is not just a compliance exercise. It provides important benefits to the firm and its clients:
Detects errors such as duplicate postings or misallocated receipts.
Identifies potential fraud or unauthorised transactions quickly.
Confirms that each client’s funds are intact and correctly recorded.
Ensures that residual balances are spotted and returned promptly.
Provides transparency and confidence to clients, auditors, and the SRA.
Regular reconciliation demonstrates that a firm takes client money protection seriously.
How often reconciliations should be done in practice
While the SRA’s five-week rule is the minimum requirement, best practice is to reconcile the client account monthly or weekly, depending on the size and complexity of the firm.
Weekly reconciliation
Many firms reconcile weekly because it:
Catches errors early, reducing the chance of cumulative mistakes.
Simplifies end-of-month reporting.
Helps maintain daily awareness of cash flow and client funds.
Smaller firms with fewer transactions might find a weekly process sufficient to stay compliant and accurate.
Monthly reconciliation
Firms with larger or more complex transactions often conduct formal monthly reconciliations, supported by ongoing spot checks or interim reviews. Monthly reconciliation aligns well with management reporting cycles and is common in medium-sized firms.
Continuous reconciliation
Some modern legal accounting systems allow real-time or daily reconciliation, where transactions are matched automatically as they appear in the bank feed. While not mandatory, this provides the highest level of accuracy and reduces the risk of breaches.
Ultimately, the reconciliation frequency should match the firm’s transaction volume and risk profile, provided it does not exceed the five-week SRA limit.
What a proper reconciliation includes
A compliant reconciliation should compare three sets of figures:
The client bank account balance as shown on the bank statement.
The total of the client cashbook in the firm’s accounting system.
The total of all client ledger balances.
The three figures must match exactly once all outstanding deposits and payments have been accounted for. Any difference must be investigated immediately and resolved as soon as possible.
Each reconciliation should include:
A clear statement of balances.
A list of outstanding items (such as unpresented cheques or receipts).
Explanations for any variances.
The preparer’s and reviewer’s signatures.
The COFA or another senior manager must review and approve the reconciliation regularly.
Handling discrepancies
Discrepancies are not uncommon, especially in busy practices. However, all differences must be investigated promptly. Common causes include:
Timing delays between payments and bank postings.
Data entry errors.
Incorrect allocation of transactions between client and office ledgers.
Bank charges or interest applied incorrectly.
If the cause cannot be resolved quickly, the firm should record the issue, investigate further, and, if necessary, report a material breach to the SRA.
Record keeping requirements
The SRA requires firms to keep reconciliation records for at least six years. These records should include:
Copies of the reconciliations.
Bank statements.
Client ledgers and cashbooks.
Supporting documentation for any adjustments.
These documents may be reviewed during SRA audits or by external accountants preparing the firm’s accountant’s report.
Best practices for reconciling client accounts
To make reconciliations efficient and compliant:
Use specialist legal accounting software that separates client and office money automatically.
Assign clear responsibility for preparing and reviewing reconciliations.
Conduct spot checks on client ledgers between reconciliations.
Train all staff handling client money on the SRA Accounts Rules.
Keep detailed audit trails and ensure management oversight of all financial controls.
Automating reconciliations where possible reduces manual errors and saves time.
Example scenario
A small property firm holds £1 million across several client matters. It reconciles the client account every Friday using accounting software linked to its bank feed. Each week, the finance manager compares the bank statement, cashbook, and client ledgers.
During one reconciliation, they spot a £2,000 discrepancy caused by a deposit recorded twice. Because the firm reconciles weekly, the error is identified and corrected immediately, avoiding a potential SRA breach or client concern.
Common mistakes to avoid
Reconciling less frequently than every five weeks.
Failing to investigate discrepancies promptly.
Mixing client and office funds in the same ledger.
Not keeping signed and dated copies of reconciliations.
Allowing untrained staff to handle reconciliations without oversight.
Consistent reviews by senior management or the COFA help prevent these issues.
Conclusion
Solicitors must reconcile their client account at least every five weeks under the SRA Accounts Rules, but more frequent reconciliations are best practice. Regular checks protect client money, ensure compliance, and strengthen trust in your firm’s financial integrity.
By using proper accounting systems, training staff, and keeping thorough records, firms can maintain control of client funds and avoid regulatory problems. Reconciliation is not just a compliance requirement — it is a vital safeguard for clients and the reputation of the profession.