The Compliance Conundrum Quiz

The Compliance Conundrum Quiz is a compliance quiz consisting of 50 randomly generated questions that are populated automatically, each day. There is a time limit of 1 hour and the quiz will automatically finalise and submit when the time runs out.

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Results

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QUIZZES

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EVENTS

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

Yes

#2. 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

#3. The Money Laundering Regulations 2017 (MLR) made it a legal requirement that all regulated businesses must have a firm-wide/practice wide risk assessment on AML and CTF. Which regulation does this fall under:

Regulation 18

Regulation 19

Regulation 20

Regulation 21

#4. Which of the following are NOT taxable VAT rates? *

Select all that apply:

Standard

Reduced

Zero

Exempt

Outside the Scope of VAT

#5. 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

#6. You pay the window cleaner for cleaning the windows of your offices. They are not registered for VAT.

What VAT rate should you select when posting the invoice to the accounting system?

Zero Rated

Reduced Rate (5%)

Standard Rate (20%) but override the VAT amount to £0.00

Exempt

Outside the Scope of VAT

#7. In law firms that are transactional, the MLRO will submit suspicious activity reports often asking for a Defence Against Money Laundering (DAML) or consent to proceed. When they have been received the NCA have how many days to respond (notice period):

Five working days

Five calendar days

Seven working days

Seven calendar days

#8. 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

#9. The bank has charged you for sending funds electronically. It is agreed with the client that the cost charged by the bank will be passed on to the client. You are NOT charging the client an administration fee for sending the payment.

How should this cost be shown on the bill to the client?

Disbursement no VAT

Disbursement with VAT

Recharge no VAT

Recharge plus VAT

#10. 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

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

True

False

#12. The practice-wide risk assessment will be required by the SRA as one of the most important pieces of documentation in relation to AML. It is a living document and should be updated:

Every six months

On an annual basis

Every 1 - 2 years

As often as necessary

#13. The maximum fine the SRA can impose on a firm for AML failures and breaches of the MLR2017 is £25,000:

True

False

#14. According to Google’s Aristotle project, which characteristic of a strong team is the most important:

High level of trust

Finding the work meaningful

Having defined structure and clarity in the team

Psychological safety (safety from rebukes, embarrassment, ignoring ideas etc)

#15. You operate various client’s own accounts. SRA Accounts Rule 10 appears to require you to carry out a bank reconciliation for these accounts.

Are you required to prepare a three way bank reconciliation every 5 weeks if you can’t obtain bank statements from the bank or building society?

Yes

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

Yes

#17. The MLRO will receive internal suspicious activity reports and then make their report, if necessary, to:

The Serious Organised Crime Office (SOCA)

The Serious Fraud Office (SFO)

Action Fraud

The National Crime Agency (NCA)

#18. 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

#19. On the day of an SRA AML visit the SRA will look at selected matters. How many files will they ask to review?

Unlimited number of files

#20. A court fee has been paid from the business account, what VAT rate do you analyse the payment to when posting to the accounts system?

Zero Rated

Exempt

20%

Outside the Scope of VAT

#21. 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

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

True

False

#23. 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

#24. What is the name given to the cash flow method where the cash flow forecast predicts when cash will be coming in and out of the business at specific points in time i.e. the exact day or week in a month?

The Indirect Method

The Direct Method

#25. 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

#26. A “qualified” accountant’s report means:

It has been carried out by an accountant who is qualified

Serious breaches were identified and reported to by the accountant

Breaches were not identified

It is a term used to describe very compliant practices

#27. Under the Proceeds of Crime Act and the Money Laundering Regulations all regulated businesses must have a nominated officer or MLRO. What do the initials MLRO stand for

Money Laundering Recording Officer

Money Laundering Reporting Officer

Money Laundering Receiving Officer

Money Laundering Regulations Officer

#28. I no longer need to consider time frames when transferring costs (fees and disbursements) to the business account?

True

False

#29. What does MLRO stand for?

Money Laundering Reporting Officer

Money Laundering Recording Officer

Means Legalising Recording Officer

Means Legal Recording Official

#30. Your practice is a traditional partnership. The partners of the practice administer oaths.

Are the fees received for administering the oaths subject to output VAT?

Yes

#31. You’re firm is acting for the executors in dealing with the administration of a deceased person’s estate and have sent a bill to the executors, together with the estate accounts for approval. You have asked the solicitor that is acting if you can transfer costs from the client account to the business account to discharge the bill in full. The solicitor has replied “no, as costs are not properly due”.

Is this a breach of SRA Accounts Rule 4.2?

Yes

#32. You’ve been instructed by a parent company to act for a subsidiary. The parent company belongs in the UK. The subsidiary belongs in France. You need to issue a VAT invoice for £10,000.

Who do you address your VAT invoice to and what VAT rate do you apply?

The parent company with 20% VAT

The parent company as Outside the Scope of UK VAT

The subsidiary with 20% VAT

The subsidiary as Outside the Scope of UK VAT

#33. If a business expects to spend more than it earns, it becomes known as what?

Cash flow neutral

Cash flow positive

Cash flow rich

Cash flow negative

#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. You’re acting for client in a land dispute case where the client has taken action against a deceased’s estate to secure title to a property they own. The client’s place of belonging is the USA. The disputed land is the UK. You draft an invoice for £2,000.00. What VAT rate do you apply to your supply?

Zero Rated

Reduced Rate (5%)

Standard Rate (20%)

Exempt

Outside the Scope of VAT

#36. 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

#37. You’re acting for a client whose place of belonging is Jersey. You have instructed a UK barrister on behalf of the client. The barrister has issued you with a VAT invoice addressed to your firm and has charged you £2,000 plus VAT.

When billed to the client, you would treat the cost as:

Recharge net cost plus VAT

Disbursement net cost plus VAT

Recharge net cost no VAT

Disbursement net cost no VAT

#38. Which one of the following statements is true?

The legal practice is often referred to as the "escrow agent'

An escrow account is a contractual agreement where a third party holds money in accordance with the terms of an escrow agreement

An escrow account can only be used by legal practices

An escrow account is an alternative means of providing banking facilities

#39. The bank has offered you a fixed term, high interest, client account. You would need to place £2 million in the account for a fixed term of 1 year to obtain the rate.

Is this permissible?

Yes

Depends

#40. One of the equity partners of your firm is selling a property she owns solely. There is no mortgage on the property. She has asked for the sale proceeds to be sent to the firm and has asked you what bank account details she should provide to the other side solicitors.

You inform her to provide the:

Client Account Bank Details

Office/Business Account Details

#41. You receive an invoice from an overseas supplier for £100 (without VAT) but you would have been charged £20.00 VAT if you’d used a UK supplier.

What figures would you need to put on your VAT return and in what boxes would you put them?

£100 (net value) in box 7 only

£20 (input VAT) in box 4 only

£20 (input VAT) in box 4 and £100 (net value) in box 7

£20 (output VAT) in box 1, £20 (input VAT) in box 4, £100 (net value) in box 6, £100 (net value) in box 7

#42. You instruct a third party contractor to represent your client at a police station who has been arrested. The third party issues you with an invoice addressed to your firm with no VAT as they are not VAT registered. You pass this cost on to your client.

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

Disbursement net cost plus VAT

Disbursement net cost with no VAT

Recharge net cost plus VAT

Recharge net cost with no VAT

#43. 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

#44. You’re acting for a client in respect of a divorce. Your client’s place of belonging is Spain. Your firm’s place of belonging is the UK.

Under the post Brexit VAT rules, when invoicing the client, what tax rate do you apply?

Zero Rated

Reduced Rate (5%)

Standard Rate (20%)

Exempt

Outside the Scope of UK VAT

#45. 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

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

True

False

#47. In a non-contentious case, the VAT tax point will be the date of the invoice, provided the invoice is issued within how long after the work is completed?

7 Days

14 Days

21 Days

30 Days

3 Months

#48. Under the SRA Accounts Rules, are you required to obtain the client’s approval prior to transferring costs to the business account?

Yes

#49. 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

#50. The petty cash tin is another form of business/office bank account?

True

False

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The Compliance Conundrum Quiz

Results

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

#3. The Money Laundering Regulations 2017 (MLR) made it a legal requirement that all regulated businesses must have a firm-wide/practice wide risk assessment on AML and CTF. Which regulation does this fall under:

#4. Which of the following are NOT taxable VAT rates? *

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

#6. You pay the window cleaner for cleaning the windows of your offices. They are not registered for VAT.What VAT rate should you select when posting the invoice to the accounting system?

#7. In law firms that are transactional, the MLRO will submit suspicious activity reports often asking for a Defence Against Money Laundering (DAML) or consent to proceed. When they have been received the NCA have how many days to respond (notice period):

#9. The bank has charged you for sending funds electronically. It is agreed with the client that the cost charged by the bank will be passed on to the client. You are NOT charging the client an administration fee for sending the payment.How should this cost be shown on the bill to the client?

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

#12. The practice-wide risk assessment will be required by the SRA as one of the most important pieces of documentation in relation to AML. It is a living document and should be updated:

#13. The maximum fine the SRA can impose on a firm for AML failures and breaches of the MLR2017 is £25,000:

#14. According to Google’s Aristotle project, which characteristic of a strong team is the most important:

#15. You operate various client’s own accounts. SRA Accounts Rule 10 appears to require you to carry out a bank reconciliation for these accounts. Are you required to prepare a three way bank reconciliation every 5 weeks if you can’t obtain bank statements from the bank or building society?

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

#17. The MLRO will receive internal suspicious activity reports and then make their report, if necessary, to:

#19. On the day of an SRA AML visit the SRA will look at selected matters. How many files will they ask to review?

#20. A court fee has been paid from the business account, what VAT rate do you analyse the payment to when posting to the accounts system?

#21. A cash flow forecast is?

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

#23. 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?

#24. What is the name given to the cash flow method where the cash flow forecast predicts when cash will be coming in and out of the business at specific points in time i.e. the exact day or week in a month?

#25. 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:

#26. A “qualified” accountant’s report means:

#27. Under the Proceeds of Crime Act and the Money Laundering Regulations all regulated businesses must have a nominated officer or MLRO. What do the initials MLRO stand for

#28. I no longer need to consider time frames when transferring costs (fees and disbursements) to the business account?

#29. What does MLRO stand for?

#30. Your practice is a traditional partnership. The partners of the practice administer oaths.Are the fees received for administering the oaths subject to output VAT?

#32. You’ve been instructed by a parent company to act for a subsidiary. The parent company belongs in the UK. The subsidiary belongs in France. You need to issue a VAT invoice for £10,000.Who do you address your VAT invoice to and what VAT rate do you apply?

#33. If a business expects to spend more than it earns, it becomes known as what?

#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. 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?

#37. You’re acting for a client whose place of belonging is Jersey. You have instructed a UK barrister on behalf of the client. The barrister has issued you with a VAT invoice addressed to your firm and has charged you £2,000 plus VAT.When billed to the client, you would treat the cost as:

#38. Which one of the following statements is true?

#39. The bank has offered you a fixed term, high interest, client account. You would need to place £2 million in the account for a fixed term of 1 year to obtain the rate.Is this permissible?

#41. You receive an invoice from an overseas supplier for £100 (without VAT) but you would have been charged £20.00 VAT if you’d used a UK supplier.What figures would you need to put on your VAT return and in what boxes would you put them?

#44. You’re acting for a client in respect of a divorce. Your client’s place of belonging is Spain. Your firm’s place of belonging is the UK.Under the post Brexit VAT rules, when invoicing the client, what tax rate do you apply?

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

#47. In a non-contentious case, the VAT tax point will be the date of the invoice, provided the invoice is issued within how long after the work is completed?

#48. Under the SRA Accounts Rules, are you required to obtain the client’s approval prior to transferring costs to the business account?

#49. 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?

#50. The petty cash tin is another form of business/office bank account?

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#6. You pay the window cleaner for cleaning the windows of your offices. They are not registered for VAT.

What VAT rate should you select when posting the invoice to the accounting system?

#9. The bank has charged you for sending funds electronically. It is agreed with the client that the cost charged by the bank will be passed on to the client. You are NOT charging the client an administration fee for sending the payment.

How should this cost be shown on the bill to the client?

#15. You operate various client’s own accounts. SRA Accounts Rule 10 appears to require you to carry out a bank reconciliation for these accounts.

Are you required to prepare a three way bank reconciliation every 5 weeks if you can’t obtain bank statements from the bank or building society?

#30. Your practice is a traditional partnership. The partners of the practice administer oaths.

Are the fees received for administering the oaths subject to output VAT?

#32. You’ve been instructed by a parent company to act for a subsidiary. The parent company belongs in the UK. The subsidiary belongs in France. You need to issue a VAT invoice for £10,000.

Who do you address your VAT invoice to and what VAT rate do you apply?

#37. You’re acting for a client whose place of belonging is Jersey. You have instructed a UK barrister on behalf of the client. The barrister has issued you with a VAT invoice addressed to your firm and has charged you £2,000 plus VAT.

When billed to the client, you would treat the cost as:

#39. The bank has offered you a fixed term, high interest, client account. You would need to place £2 million in the account for a fixed term of 1 year to obtain the rate.

Is this permissible?

#41. You receive an invoice from an overseas supplier for £100 (without VAT) but you would have been charged £20.00 VAT if you’d used a UK supplier.

What figures would you need to put on your VAT return and in what boxes would you put them?

#44. You’re acting for a client in respect of a divorce. Your client’s place of belonging is Spain. Your firm’s place of belonging is the UK.

Under the post Brexit VAT rules, when invoicing the client, what tax rate do you apply?