The Solicitors Regulation Authority (SRA) has revealed that the number of accountants’ reports being submitted for review has fallen by two-thirds since changes to the rules were introduced.

The changes, which came into effect in November 2015, allowed accountants to apply greater professional judgement in reviewing risks to client money. Under the revised rules, firms must submit ‘qualified’ accounts to the SRA, i.e. accounts where a potential issue or rule breach has been identified.

These changes allow accountants to apply greater professional judgement in reviewing risks to client money. This reduction has coincided with a trebling of the number of reports we investigate more fully because the reasons for qualifying the reports focus more specifically on genuine risks to client money.

The SRA have revealed that between June and November 2017, 923 qualified reports were submitted, down from 2,797 over the same period in 2015. Of these submissions, 121 reports were further investigated, compared to just 38 two years earlier. The highly technical and specific nature of the current Accounts Rules contributes to the vast majority of breaches occurring.

Although in most cases the investigation of qualified reports does not result in formal action being required, six cases did lead to regulatory action in 2016. Under the proposed Handbook reforms – due to be implemented from 2019 onwards – new Accounts Rules are set to be introduced. These focus on keeping client money safe and removing much of the prescriptive detail from the rules, which in turn should further reduce the number of accounts needing to be qualified.

Paul Philip, Chief Executive of the SRA, said:

“These findings are encouraging and show that this approach is meeting our expectations. We are ensuring a sharp focus on public protection, while reducing unnecessary bureaucracy for firms.