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.
#1. 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?
#2. Which one of the following statements is true?
#3. Most law firms now use electronic ID and verification tools as part of their client onboarding. These tools are there to help you:
#4. Your firm is acting for a client in respect of a purchase of a residential property. The lawyer applies for an OS1 search direct from the Land Registry. The search result reveals that there has been alterations made to the register since the date the Official Copies were produced by way of a restriction. The lawyer advises the client on the results of the search.
When billed to the client, you would treat the cost as:
#5. 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?
#6. A ‘Statement of Costs On Account’ bill is:
#7. You instruct a medical reporting agency to obtain copy-medico 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?
#8. Which of the following actions is an example of good leadership?
#9. 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?
#10. What is the name given to the VAT that is due on your taxable supplies i.e your fees/expenses and vatable disbursements?
#11. The Sales Ledger Control Account (Debtors) is:
#12. Money received from the Legal Aid Agency on account of disbursements that are not yet incurred or paid is?
#13. 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?
#14. 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
#15. Which one of of the following statements is correct?
#16. 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?
#17. 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?
#18. 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?
#19. You’re acting for the executors in dealing with the administration of a deceased person’s estate. The deceased was a British National and resided in the UK. However the executors and those you are corresponding with are based in Canada. There is UK property involved and it forms a significant portion of the estate along with UK based bank accounts.
When issuing the bill to the executors, is supply subject to standard rated VAT?
#20. The SRA Accounts Rules require a business/office account to be reconciled?
#21. 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?
#22. When the SRA have contacted you and confirmed a date for an AML visit you will need to send the requested documents to them usually within:
#23. You’ve pursued a bad debt through the court. The court has awarded you costs and interest. Do you:
#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’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?
#26. 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?
#27. On the day of an SRA AML visit the SRA will speak to selected fee earners. Usually this will be:
#28. Payments made out of the client bank account are recorded to the client cash book as:
#29. Normal VAT Tax Point (time of supply) rules apply to Legal Aid work?
#30. 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:
#31. The ‘Balance Sheet Test’ is when?
#32. The petty cash tin is another form of business/office bank account?
#33. The SRA Accounts Rules require a client bank reconciliation to be carried out, completed and checked:
#34. You must obtain physical copies of client account bank statements.
#35. A ‘Disbursement for VAT Purposes’ is:
#36. 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?
#37. The maximum fine the SRA can impose on a firm for AML failures and breaches of the MLR2017 is £25,000:
#38. How is the ‘Current Ratio’ (which is sometimes also called Working Capital Ratio) calculated?
#39. 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?
#40. 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?
#41. 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?
#42. You purchased a computer for £800.00. You sold it for £1,000.00. You purchased it again for £1,100.00. You sold it again for £1,300.00
What is the profit/(loss)?
#43. When building a team, effective leaders:
#44. 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):
#45. Withdrawals from the client bank account are recorded to the client cash book as:
#46. Firms are allowed to pay residual balances to a charity of the firm’s choice provided the firm complies with the SRA’s prescribed circumstances.
They do not need to make an application to the SRA if the balance is:
#47. 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?
#48. 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:
#49. 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: