On Demand Workshop – COFA Compliance Masterclass

COFA Compliance Masterclass

Speaker: Darren Whelan

Length: 2.5 Hours

Published November 26, 2022

Last Updated on May 1, 2023

Who is this training for?

This on demand workshop is for Solicitors, Lawyers, Accountants, Compliance Officers, COFA’s, Legal Accounts Professionals and anyone that has any involvement in working in legal finance and compliance.

Purpose of this training?

Since January 2013, the Compliance Officer for Finance and Administration (COFA) has had significant responsibility for ensuring firm’s meet their regulatory obligations and compliance with the SRA Accounts Rules and that any breaches of the SRA Accounts Rules are documented and reported back to the SRA. In addition to the COFA’s role in relation to the SRA Accounts Rules, the COFA has a duty under the SRA Code of Conduct for Firms to report to the SRA when the practice is in serious financial difficulties. The role of the COFA comes with personal liability.

This on demand workshop will cover the regulatory obligations of the firm, individuals within the firm and the key role of the COFA.

The background and role of the COFA
The SRA Standards and Regulations
COFA responsibilities, record keeping and reporting concerns
Codes of Conduct – for firms and individuals
Business Management – Compliance and Business systems
Assessing risk
SRA Accounts Rules
Cooperation and accountability

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Results

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Quizzes

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#1. Your firm deals with estate matters and you incur and pay for probate court fees. You also pay for additional copies of the grant of probate. These copies are often sent out to third parties in order to speed up process. You pass the cost of the additional copies on to the estate.

How should you show them and treat them on your bill/invoice?

Recharge net cost plus VAT

Recharge net cost with no VAT

Disbursement net cost plus VAT

Disbursement net cost with no VAT

#2. When dealing with residual balances, instead of recording the payment to the charity from the client’s ledger, your firm moves the residual balance to a ledger in the name of the charity. The payment is then recorded and made from that ledger every six months.

Is this a breach of the SRA Accounts Rules?

Yes

#3. Is it permissible to pass on the costs of conducting client due diligence as a disbursement under the AML under the money laundering regulations on to my client?

Yes

#4. You have instructed an interpreter in order for your client to be able to communicate with you or to enable your client to understand Court proceedings. The cost of the interpreter is being passed on to the client. When billed, the cost is:

A Disbursement

A Recharge

#5. Your firm is instructed by the landlord of a new development of commercial properties to prepare the lease agreements. You're also instructed to receive, and hold in client account, the rental deposits that are paid by the tenants. These will be held until the lease comes to an end and any conditions, e.g. dilapidations, are met.

Is this a breach of the SRA Accounts Rules?

Yes

#6. The Transparency Rules require all regulated firms, and individual freelance solicitors who publish as part of their usual business that they offer certain services, to publish information on the prices that they charge. Rule 1.3 list the services where you are required to publish the information. Which one of the following is not on the list?

Probate cases where all assets are in the UK

Immigration excluding asylum applications

Motoring offences – summary only offences

Divorce cases where all assets are in the UK

#7. When does the Accountants Report (AR1) need to be sent to the SRA?

When the report is qualified

All reports should be sent to the SRA

Reports should be sent at the COFAs discretion

When firms hold client money

#8. Which of the following is responsible for compliance with the SRA Accounts Rules?

Select all that apply:

The COFA

The partners/managers

The employees

The firm (authorised body)

#9. If client money is legitimately retained for a specified reason, are you required to regularly update the client?

Yes

#10. You have paid a disbursement from the business account and now have sufficient money held in the client account towards it.

Are you required to send the client a bill or other written notification of costs prior to transferring the money from the client account to the business account?

Yes

#11. When dealing with residual balances that are £500 or less that are to be paid to a charity, your firm posts a journal from the business side of the client’s ledger and credits a nominal ledger in the name of the charity. You then transfer the residual balance from the client account to the business account.

Once a month, the payment to the charity is made from the charity nominal ledger. Is this permissible under the SRA Accounts Rules?

Yes

#12. A cash flow forecast is?

When income is earned and when costs are incurred

A plan that shows how much money a business expects to receive in, and pay out, over a specific period of time

A financial plan for a defined period, often one year

#13. A cyber-attack cannot be reported by the COFA as it is not mentioned in the SRA Accounts Rules and is unlikely to result in a serious breach under the SRA Accounts Rules?

True

False

#14. The SRA Accounts Rules require a business/office account to be reconciled?

True

False

#15. Your firm operates under the VAT Cash Accounting Scheme. Which of the following are excluded from the scheme and must be accounted for under the VAT Standard Accounting Scheme?

Select all that apply:

Where you issue a VAT invoice and payment of that invoice is not due in full within 6 months of the date it was issued

Supplies of services where you issue a VAT invoice in advance of the service being provided

#16. How is the 'Current Ratio' (which is sometimes also called Working Capital Ratio) calculated?

Current assets divided by total liabilities

Current assets divided by current liabilities

Current liabilities divided by current assets

#17. The Legal Omsbudsman has the power to award compensation when a client wins their case. What is the highest figure the Legal Ombudsman can award?

£10,000.00

£25,000.00

£50,000.00

£100,000.00

#18. Which 2 options below are most likely to be reasons for deciding if a breach is serious?

Select all that apply:

How long the individual has been at the firm

The scale and scope of the issue

Loss to the client

#19. The client bank reconciliation must be signed by:

COFA or manager

A non-owner solicitor

A legal cashier

Head of finance

#20. Your firm acted for a client in the sale of commercial premises. The transaction has been completed and the firm are in the process of accounting to the client for the net proceeds of sale. Independently of this retainer, the client’s son has instructed another solicitor in your firm to act for him in buying a flat.

The father has asked your firm to retain enough money to cover his son’s legal fees and to send the balance to him. Your firm is concerned that by transferring the money to the son you may be in breach of rule 3.3.

Is this providing banking facilities?

Yes

#21. The COFA is solely responsible for monitoring and controlling financial stability.

True

False

#22. A bill of costs must be signed by a partner/director or member?

True

False

#23. Is it permissible to issue the client with a bill of costs for an unpaid, not yet incurred, disbursement?

Yes

#24. The cost of any time taken in trying to return a residual balance to the client can be deducted from the balance held?

True

False

#25. You instruct a medical reporting agency to obtain copy-medical legal documents on behalf of a client that has been involved in a road traffic accident.

Is this cost a disbursement for VAT purposes or a recharge?

Disbursement

Recharge

#26. Your firm prepare a lot of wills and fixed fee interviews as one-off transactions for clients. However, instead of opening an individual client ledger for each client, you have a general ledger on which you record the details of each client and the costs received.

Is this a breach of the SRA Accounts Rules?

Yes

#27. A solicitor from ABC Law is acting for a farmer who is granting Company X with rights to put a wind farm on his land. The solicitor is advising on the contract/lease outlining the rights of the wind farm on the farmers' land.

After the contract is completed ABC Law receive rental payments into client account each quarter.

Is this providing banking facilities?

Yes

#28. The COFA must report all breaches to the SRA.

True

False

#29. Your firm acted for a client in the sale of commercial premises which is now completed. Your firm are in the process of accounting to him for the net proceeds of sale. Independently of this retainer, the client’s daughter has instructed another solicitor in your firm to act for her in buying a flat.

The father has asked the firm to retain enough money to cover his daughter’s legal fees and to send the balance to him.

Is this providing banking facilities?

Yes

#30. Money received from the Legal Aid Agency on account of disbursements that are not yet incurred or paid is?

Client Money

Business Money

#31. The Transparency Rules 2018 form part of the SRA Standards and Regulations 2019 although they were released nearly a year before the Standards and Regulations. Why was this?

The SRA promised the Competition and Markets Authority that it would put something out before the end of 2018

The SRA needed to test the Standards and Regulations before they released them so the Transparency Rules were the test rules

The Law Society were pressuring the SRA to put out this price and service information

There were so many complaints to the Legal Ombudsman about prices that the SRA brought the Transparency Rules out early

#32. Every law firm, regardless of the type of work they do, must have their complaints handing information on their website or in another format if they don’t have a website.

True

False

#33. Transparency Rule 4.1 covers the digital badge (sometimes called the clickable logo) which shows any website visitors that your firm is regulated and it gives them a link to the protection that provides. How will a website visitor know if the logo on your website is valid?

It will be at the top of your website page

It will show the current date

It will be purple in colour

The logo will show your SRA number

#34. Rule 1.5 of the Transparency Rules states that certain costs information must be included in the information on the website. Which one of the following does not have to be included in that information?

The total costs, average costs or range of costs of the service

Whether fees or disbursements attract VAT

The experience and qualifications of the people carry out the work on the matter

The timescales for the bill of costs to be paid

#35. When a client needs to make a complaint about your firm, they must follow the firm’s complaints procedures. If they are not happy with the way the complaint has been dealt with, they will then take it further by going to the Legal Ombudsman (LeO). They must make their complaint to LeO within which time scale after the firm’s final response to them?

Six months

One year

Three years

Five years

#36. The SRA has stated that it will take a more robust approach towards fines for persistent offenders in regard to the Transparency Rules. What is the maximum amount the SRA can fine a law firm?

£2,000.00

£5,000.00

£25,000.00

£50,000.00

Finish

Further Information

SRA Accounts Rules

Accounts & Finance Practice Notes

Compli-Q – Compliance FAQs

Breach Severity Calculator

Blogs

Compli-Forum

Practice notes and training sessions represent the Association of Legal Compliance & Accounts’ view of good practice in a particular area. They are not intended to be the only standard of good practice that firms can follow.

Practice notes and training sessions are not legal advice, and do not necessarily provide a defence to complaints of misconduct or poor service. While we have taken care to ensure that they are accurate, up to date and useful, we will not accept any legal liability in relation to them.

Frequently Asked Questions

Why On Demand

It’s really simple:

Reduced cost
Can be watched anywhere, anytime on any device – no travel time or cost
Shorter and more efficient than face-to-face
Recorded and can be replayed at your leisure

Online – the Cons

On Demand is not for everyone one. People learn differently and watching a pre-recorded training video can feel very lonely and isolated. It requires strong, self-motivation and time management skills. There is no opportunity to ask a question and receive an answer straight away as you would with an online or a face-to-face workshop.

You can pose your question HERE or pose the question via the LiveChat widget.

No. In order to watch them, you must watch them whilst logged into the website.

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On Demand Workshop – COFA Compliance Masterclass

COFA Compliance Masterclass

Who is this training for?

Purpose of this training?

Results

#3. Is it permissible to pass on the costs of conducting client due diligence as a disbursement under the AML under the money laundering regulations on to my client?

#4. You have instructed an interpreter in order for your client to be able to communicate with you or to enable your client to understand Court proceedings. The cost of the interpreter is being passed on to the client. When billed, the cost is:

#7. When does the Accountants Report (AR1) need to be sent to the SRA?

#8. Which of the following is responsible for compliance with the SRA Accounts Rules?

#9. If client money is legitimately retained for a specified reason, are you required to regularly update the client?

#10. You have paid a disbursement from the business account and now have sufficient money held in the client account towards it.Are you required to send the client a bill or other written notification of costs prior to transferring the money from the client account to the business account?

#12. A cash flow forecast is?

#13. A cyber-attack cannot be reported by the COFA as it is not mentioned in the SRA Accounts Rules and is unlikely to result in a serious breach under the SRA Accounts Rules?

#14. The SRA Accounts Rules require a business/office account to be reconciled?

#15. Your firm operates under the VAT Cash Accounting Scheme. Which of the following are excluded from the scheme and must be accounted for under the VAT Standard Accounting Scheme?

#16. How is the 'Current Ratio' (which is sometimes also called Working Capital Ratio) calculated?

#17. The Legal Omsbudsman has the power to award compensation when a client wins their case. What is the highest figure the Legal Ombudsman can award?

#18. Which 2 options below are most likely to be reasons for deciding if a breach is serious?

#19. The client bank reconciliation must be signed by:

#21. The COFA is solely responsible for monitoring and controlling financial stability.

#22. A bill of costs must be signed by a partner/director or member?

#23. Is it permissible to issue the client with a bill of costs for an unpaid, not yet incurred, disbursement?

#24. The cost of any time taken in trying to return a residual balance to the client can be deducted from the balance held?

#25. You instruct a medical reporting agency to obtain copy-medical legal documents on behalf of a client that has been involved in a road traffic accident.Is this cost a disbursement for VAT purposes or a recharge?

#28. The COFA must report all breaches to the SRA.

#30. Money received from the Legal Aid Agency on account of disbursements that are not yet incurred or paid is?

#31. The Transparency Rules 2018 form part of the SRA Standards and Regulations 2019 although they were released nearly a year before the Standards and Regulations. Why was this?

#32. Every law firm, regardless of the type of work they do, must have their complaints handing information on their website or in another format if they don’t have a website.

#33. Transparency Rule 4.1 covers the digital badge (sometimes called the clickable logo) which shows any website visitors that your firm is regulated and it gives them a link to the protection that provides. How will a website visitor know if the logo on your website is valid?

#34. Rule 1.5 of the Transparency Rules states that certain costs information must be included in the information on the website. Which one of the following does not have to be included in that information?

#36. The SRA has stated that it will take a more robust approach towards fines for persistent offenders in regard to the Transparency Rules. What is the maximum amount the SRA can fine a law firm?

Further Information

Frequently Asked Questions

Why On Demand?

Why On Demand

Online – the Cons

How do I pose a question as a result of watching an On Demand training session?

Can I download the On Demand videos?

Recent Compli-Forum Topics

Recent Blogs

#10. You have paid a disbursement from the business account and now have sufficient money held in the client account towards it.

Are you required to send the client a bill or other written notification of costs prior to transferring the money from the client account to the business account?

#25. You instruct a medical reporting agency to obtain copy-medical legal documents on behalf of a client that has been involved in a road traffic accident.

Is this cost a disbursement for VAT purposes or a recharge?