What is a solicitor’s COFA and how do accountants support them?

The Compliance Officer for Finance and Administration (COFA) is one of two mandatory compliance roles required by the SRA, alongside the Compliance Officer for Legal Practice (COLP). While the COLP focuses on ethical and professional conduct, the COFA is responsible for ensuring that the firm complies with financial regulations, including the SRA Accounts Rules.

This position carries personal accountability, meaning that the COFA can be held responsible if a firm breaches financial regulations or mishandles client money. Accountants play a crucial supporting role in helping COFAs meet these obligations effectively.

What is the role of a COFA?

The COFA is the firm’s primary officer responsible for:

• Ensuring compliance with the SRA Accounts Rules.

• Overseeing systems and controls for handling client and office money.

• Identifying, recording, and reporting financial breaches to the SRA.

• Maintaining accurate records of client account reconciliations.

• Supporting the firm’s partners and management team with financial oversight.

In smaller practices, the COFA is often one of the partners or even the sole practitioner, while in larger firms, it may be a finance director or senior compliance officer.

The COFA’s responsibilities go beyond simple bookkeeping. They are expected to understand the SRA’s regulatory expectations, maintain internal controls, and ensure that all staff follow the correct procedures when dealing with client money.

How accountants support solicitors’ COFAs

The COFA’s duties are extensive and can be difficult to manage alongside day-to-day legal practice. Accountants provide essential support by combining regulatory expertise with practical financial management.

1. Setting up compliant financial systems

Accountants help COFAs establish financial systems that meet SRA requirements. This includes creating clear processes for separating client and office money, recording transactions, and performing reconciliations.

They can also recommend and implement legal accounting software that integrates with case management systems, automates record keeping, and produces compliance-ready reports.

2. Conducting regular reconciliations

The SRA requires law firms to reconcile client accounts at least every five weeks. Accountants assist COFAs by preparing or reviewing these reconciliations, identifying discrepancies, and ensuring that any issues are corrected promptly.

Regular reconciliations also help detect potential breaches early, preventing more serious compliance problems later.

3. Preparing the SRA Accountant’s Report

Every law firm that holds client money must have an annual review carried out by an independent accountant. This process results in an SRA Accountant’s Report, which confirms whether the firm has complied with the Accounts Rules.

Accountants handle this entire process, working closely with the COFA to:

• Review ledgers and bank statements.

• Test financial controls and record keeping.

• Identify and assess any breaches.

• Submit the report to the SRA if necessary.

By doing so, they provide assurance that the firm’s systems are working effectively and that the COFA is meeting their obligations.

4. Managing breach identification and reporting

A key responsibility of the COFA is to record and report any breaches of the Accounts Rules. Accountants help design and maintain a breach register, ensuring that every issue no matter how small is documented and reviewed.

They can also advise the COFA on whether a breach needs to be reported to the SRA immediately or can be logged internally. This helps the firm maintain transparency while avoiding unnecessary self-reports.

5. Advising on client interest and financial controls

Calculating and paying interest on client funds is another area where COFAs must demonstrate compliance. Accountants help firms create policies for calculating interest fairly and ensure that these are applied consistently.

They also review financial controls such as:

• Authorisation levels for payments.

• Timing of fund transfers.

• Handling of residual balances.

This ensures that the firm’s internal processes align with both the SRA Accounts Rules and best practice in financial management.

6. Supporting Making Tax Digital and VAT compliance

Many COFAs are also responsible for VAT compliance and tax submissions. Accountants assist by setting up digital accounting systems that meet Making Tax Digital (MTD) requirements, filing VAT returns, and ensuring that all tax obligations are met accurately and on time.

They also review VAT treatment on disbursements and office expenses, ensuring compliance with both HMRC and SRA rules.

7. Providing training and financial guidance

Accountants play an educational role by training the COFA and firm staff on key financial processes. This includes guidance on how to post transactions correctly, manage client balances, and recognise potential breaches.

They also keep firms up to date on changes to SRA guidance, tax law, and accounting standards, ensuring that the COFA’s knowledge remains current.

8. Conducting periodic compliance reviews

Beyond annual reporting, many firms ask their accountants to carry out periodic internal reviews. These mini-audits provide an extra layer of oversight and help COFAs demonstrate proactive compliance.

Such reviews can uncover emerging risks such as outdated procedures, misclassified transactions, or weaknesses in financial controls.

9. Assisting with financial planning and management reporting

While compliance is the COFA’s primary concern, accountants also support wider financial strategy. They prepare management accounts, cash flow forecasts, and profitability reports, allowing the COFA and partners to monitor the firm’s financial health alongside its compliance performance.

This information helps the COFA balance financial stability with regulatory integrity.

Why COFAs and accountants work best together

The partnership between a COFA and an accountant creates a strong foundation for both compliance and financial efficiency. The accountant brings technical expertise, while the COFA ensures the firm’s culture supports good governance and accountability.

Together they:

• Maintain accurate and compliant financial records.

• Reduce the risk of SRA breaches.

• Support sustainable growth and profitability.

• Provide reassurance to clients, regulators, and partners.

Without professional accounting support, even well-intentioned COFAs can struggle to keep up with regulatory changes and the administrative burden of compliance.

Example in practice

A small litigation firm’s COFA was overwhelmed managing both compliance and day-to-day legal work. An external accountant was brought in to handle monthly reconciliations, maintain a breach register, and prepare management accounts. The accountant also trained staff on SRA-compliant posting procedures.

As a result, the firm reduced its reconciliation time from two weeks to two days, passed its SRA Accountant’s Report without issues, and gained clearer insight into its financial performance.

The growing importance of the COFA role

The SRA increasingly expects firms to take proactive responsibility for financial management and compliance. The COFA’s role has become more strategic, involving oversight of systems, risk management, and digital reporting under MTD.

Having an accountant involved not only ensures compliance but also provides the COFA with expert financial analysis and ongoing support as the regulatory landscape evolves.

Conclusion

A solicitor’s COFA is responsible for safeguarding client money and ensuring the firm complies with the SRA Accounts Rules. It is a demanding role that requires accuracy, transparency, and professional judgement.

Accountants play a crucial part in supporting COFAs by maintaining compliant systems, performing reconciliations, preparing reports, and offering strategic financial advice. Together, they create a framework that upholds trust, ensures regulatory compliance, and strengthens the financial integrity of the firm.