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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EVENTS

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#1. 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

#2. Team members should be provided with feedback:

Only during formal appraisals, so that feedback is properly documented

At the end of each week

Only when they ask for it, so you know they are receptive

At any and all appropriate moments

#3. 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

#4. Section 18 of the Legal Sector Affinity Group (LSAG) guidance covers red flags and warning signs for us to look out for regarding AML and CTF. If we have red flags and warning signs come up we are not allowed to take on the client:

True

False

#5. You’re acting for a client in respect of their divorce. The client is a US Forces personnel living in England on a three year term of duty. The client has a permanent address in the US.

Are your services subject to output VAT?

Yes

#6. Double-entry bookkeeping refers to:

The practice of keeping manual and computerised accounting records

Backing up electronic accounting records regularly

The accounting principle that every debit must have a corresponding credit

#7. 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

#8. 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

#9. 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

#10. The best leaders have one type of leadership style and stick to it consistently

True

False

#11. 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

#12. Your firm is acting for a client and has instructed a process server to serve legal documents to a third party.

When including the cost of the process server in your bill of costs, you treat it as a:

Disbursement for VAT purposes

Recharge

#13. 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

#14. 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

#15. When building a team, effective leaders:

Surround themselves with like-minded individuals, to avoid conflict within the team

Accept their own weaknesses and hire people to fill those gaps in their own expertise/skills

Hire people less skilled than them, to avoid confrontation over who is in charge

Hire the people with the most suitable skills and experience, regardless of personality traits

#16. Withdrawals from the client bank account are recorded to the client cash book as:

Debits

Credits

#17. 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

#18. What does MLRO stand for?

Money Laundering Reporting Officer

Money Laundering Recording Officer

Means Legalising Recording Officer

Means Legal Recording Official

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

True

False

#20. The Sales Ledger Control Account (Debtors) is:

A liability

An asset

An expense

#21. When should you conduct a source of funds check?

After the transaction is completed

Only when you receive client money

Early in the client journey, ideally before transactional work begins

#22. 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

#23. You’ve taken a debit card payment from a client for money on account of search fees. The card used is for a personal bank account. A partner of your firm would like to recharge the costs incurred in taking the card payment on to the client.

Is it permissible to pass the costs of taking the card payment on to the client?

Yes

#24. 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)

#25. 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

#26. 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

#27. What is the definition of ‘costs’ within the SRA Glossary?

The firm's fees

The firm's disbursements

The firm's fees and disbursements

The firm's fees and VAT

#28. Payments made out of the client bank account are recorded to the client cash book as:

Debits

Credits

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

True

False

#30. 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

#31. Which of the following is the best description for relationship conflict?

Conflict between a manager and an employee

Conflict between co-workers due to clashes in personality

Conflict between co-workers creating negative emotions

Conflict between two or more people resulting from either clashes of personality or negative emotions

#32. 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

#33. 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

#34. 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

#35. What should you request to properly verify a client’s source of funds?

A verbal confirmation of where the money came from

Clear, documented evidence like payslips, bank statements, or sale agreements

Only details of the account where the money is currently held

#36. 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

#37. Who sets out the key objectives that all regulators must achieve?

The Legal Services Board

The Legal Ombudsmen

The Solicitors Regulation Authority

The Law Society

The Legal Aid Agency?

The Chartered Institute of Legal Executives

#38. 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

#39. 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

#40. Which one of of the following statements is correct?

The accounts department is solely responsible for applying the accounts rules

Everyone working within the legal profession is governed by the accounts rules

New employees are not bound by the accounts rules until they complete their probation period

Lawyers are solely responsible for applying the accounts rules

#41. A ‘Recharge’ is:

A payment you make on behalf of a client

An office overhead not charged to the client

A cost a business incurs in the course of providing its own services to clients which is usually passed on as an additional fee

An indirect cost

#42. What is the Tax Point date of a Credit Note?

Date of issue

Original VAT invoice tax point date

There is no tax point date for a credit note

#43. Which of the following is not an element of Emotional Intelligence

Self awareness

Social awareness

Self management

Self preservation

#44. True or false: the SRA Accounts Rules set out certain requirements for law firm financial statements, such as how client account should be treated on a balance sheet

True

False

#45. How should you decide the level of source of funds enquiry needed?

Apply the same checks to every client, regardless of risk

Assess the level of risk and tailor your approach to it

Only investigate funds if the client is based outside the UK

#46. You’re acting for a client in respect of a compromise agreement. The employer has agreed to pay your client’s costs and has asked if you would address your invoice to them?

What would you issue the payer?

A VAT invoice addressed to the payer

A VAT invoice addressed to the client but denoted ‘payable by’ the third party payer

A request for payment (non-VAT invoice) addressed to the payer stating 'This is not a VAT invoice'

#47. Which of the following actions is an example of good leadership?

Showing more concern for organizational goals than employees

Remaining distanced from employees, especially subordinates

Motivating employees toward higher levels of productivity

Allowing employees to decide what needs to be accomplished

#48. 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

#49. 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

#50. On the day of an SRA AML visit the SRA will speak to selected fee earners. Usually this will be:

1 Fee Earner

2 Fee Earners

3 Fee Earners

4 Fee Earners

Finish

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The Compliance Conundrum Quiz

Results

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

#2. Team members should be provided with feedback:

#4. Section 18 of the Legal Sector Affinity Group (LSAG) guidance covers red flags and warning signs for us to look out for regarding AML and CTF. If we have red flags and warning signs come up we are not allowed to take on the client:

#5. You’re acting for a client in respect of their divorce. The client is a US Forces personnel living in England on a three year term of duty. The client has a permanent address in the US.Are your services subject to output VAT?

#6. Double-entry bookkeeping refers to:

#7. A cash flow forecast is?

#10. The best leaders have one type of leadership style and stick to it consistently

#12. Your firm is acting for a client and has instructed a process server to serve legal documents to a third party.When including the cost of the process server in your bill of costs, you treat it as a:

#14. 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?

#15. When building a team, effective leaders:

#16. Withdrawals from the client bank account are recorded to the client cash book as:

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

#18. What does MLRO stand for?

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

#20. The Sales Ledger Control Account (Debtors) is:

#21. When should you conduct a source of funds check?

#22. 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:

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

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

#26. 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?

#27. What is the definition of ‘costs’ within the SRA Glossary?

#28. Payments made out of the client bank account are recorded to the client cash book as:

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

#30. 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

#31. Which of the following is the best description for relationship conflict?

#33. 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?

#35. What should you request to properly verify a client’s source of funds?

#36. 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?

#37. Who sets out the key objectives that all regulators must achieve?

#39. 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):

#40. Which one of of the following statements is correct?

#41. A ‘Recharge’ is:

#42. What is the Tax Point date of a Credit Note?

#43. Which of the following is not an element of Emotional Intelligence

#44. True or false: the SRA Accounts Rules set out certain requirements for law firm financial statements, such as how client account should be treated on a balance sheet

#45. How should you decide the level of source of funds enquiry needed?

#46. You’re acting for a client in respect of a compromise agreement. The employer has agreed to pay your client’s costs and has asked if you would address your invoice to them?What would you issue the payer?

#47. Which of the following actions is an example of good leadership?

#48. 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?

#49. 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:

#50. On the day of an SRA AML visit the SRA will speak to selected fee earners. Usually this will be:

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#5. You’re acting for a client in respect of their divorce. The client is a US Forces personnel living in England on a three year term of duty. The client has a permanent address in the US.

Are your services subject to output VAT?

#12. Your firm is acting for a client and has instructed a process server to serve legal documents to a third party.

When including the cost of the process server in your bill of costs, you treat it as a:

#26. 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?

#33. 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?

#46. You’re acting for a client in respect of a compromise agreement. The employer has agreed to pay your client’s costs and has asked if you would address your invoice to them?

What would you issue the payer?