#1. 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

#2. 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

#3. A fee earner has issued a VAT invoice to a client and sent it via email. They have also sent a physical copy in the post.

Is this permissible?

Yes

No

#4. 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

No

#5. The three principle money laundering offences are found in the Proceeds of Crime Act 2002 (POCA). In which sections can we find these offences:

Section 127, 128 and 129

Section 227, 228 and 229

Section 327, 328 and 329

Section 427, 428 and 429

#6. 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

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

Yes

No

#8. What is the name given to the ledger layout commonly used within legal practice?

T-Account

Tablet

Tabular

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

Yes

No

#10. 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

No

#11. What is the definition of disbursement within the SRA Glossary?

Means your own charges or profit costs (including any VAT element)

Means your fees and disbursements

Means any costs or expenses paid or to be paid to a third party on behalf of the client or trust (including any VAT element) save for office expenses such as postage and courier fees

Anything that debits the office side of the client's ledger

#12. 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

#13. What does MLRO stand for?

Money Laundering Reporting Officer

Money Laundering Recording Officer

Means Legalising Recording Officer

Means Legal Recording Official

#14. 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

#15. 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

#16. You've pursued a bad debt through the court. The court has awarded you costs and interest. Do you:

Raise a bill and account for the VAT on the costs received only

Raise a bill and account for the VAT on the costs and interest received

Raise a bill and account for the VAT on the interest received only

None of the above

#17. 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

#18. 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

#19. 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)

#20. 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

#21. You pay the firm's practising certificates from the business account.

When posting the transaction, What VAT rate should you select when posting the payment to the accounting system?

Zero Rated

Reduced Rate (5%)

Standard Rate (20%)

Exempt

Outside the Scope of VAT

#22. Normal VAT Tax Point (time of supply) rules apply to Legal Aid work?

True

False

#23. 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

#24. 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

#25. 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

#26. If a team member makes a mistake you should:

Focus on the mistake and explain to them why it was wrong

Remind them of their strengths but make sure they know the error isn’t acceptable

Start performance management to ensure there is a clear record of the incident

Give them a chance to explain and take responsibility for the error

#27. 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

#28. 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

#29. 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)

#30. 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

No

#31. 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

No

#32. 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

#33. 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

#34. A 'Statement of Costs On Account' bill is:

A series of solicitors’ bills which are initially treated as requests for payments on account, but which collectively become a single statute bill upon delivery of a final bill

Solicitors’ bills that do not comply with the requirements of section 69 of the Solicitors Act 1974 constitute statements on account of costs or demands for payments on account of costs

Final statute bills or interim statute bills for the period which they cover or in respect of the engagement itself

An invoice which states only the amount of the total charge and does not provide a detailed breakdown of the work which it covers

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

2

4

8

Unlimited number of files

#36. 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

#37. 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

#38. Emotional Intelligence means:

Understanding the need to think positively and be happy at all times

Being aware of your emotions and understanding how to handle others

Removing emotion from thew workplace

Knowing when its appropriate to display an emotion

#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?

Yes

No

#40. 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

#41. 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

#42. 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

No

#43. 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

No

#44. The main purpose of delegation is to:

Free up time for the lead manager to work on more important tasks

Empower team members and help build their skills

Ensure the task is assigned to the person with the most appropriate skills

Show team members how challenging managerial-level tasks can be

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

Debits

Credits

#46. Most law firms now use electronic ID and verification tools as part of their client onboarding. These tools are there to help you:

Verify the clients identity

Check the HM Treasury Sanctions list

Check if the client is a PEP

All of the above

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

True

False

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

Self awareness

Social awareness

Self management

Self preservation

#49. 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

#50. 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

The Compliance Conundrum Quiz

Results

#1. 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?

#3. A fee earner has issued a VAT invoice to a client and sent it via email. They have also sent a physical copy in the post.Is this permissible?

#4. 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?

#5. The three principle money laundering offences are found in the Proceeds of Crime Act 2002 (POCA). In which sections can we find these offences:

#6. 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?

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

#8. What is the name given to the ledger layout commonly used within legal practice?

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

#10. 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?

#11. What is the definition of disbursement within the SRA Glossary?

#12. 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?

#13. What does MLRO stand for?

#14. 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. 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?

#16. You've pursued a bad debt through the court. The court has awarded you costs and interest. Do you:

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

#18. 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:

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

#20. A "qualified" accountant's report means:

#21. You pay the firm's practising certificates from the business account.When posting the transaction, What VAT rate should you select when posting the payment to the accounting system?

#22. Normal VAT Tax Point (time of supply) rules apply to Legal Aid work?

#23. 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?

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

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

#26. If a team member makes a mistake you should:

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

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

#30. 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?

#32. 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:

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

#34. A 'Statement of Costs On Account' bill is:

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

#36. 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. Team members should be provided with feedback:

#38. Emotional Intelligence means:

#40. 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?

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

#44. The main purpose of delegation is to:

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

#46. Most law firms now use electronic ID and verification tools as part of their client onboarding. These tools are there to help you:

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

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

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

#50. A cash flow forecast is?

Recent Compli-Forum Topics

Recent Blogs

#3. A fee earner has issued a VAT invoice to a client and sent it via email. They have also sent a physical copy in the post.

Is this permissible?

#4. 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?

#10. 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?

#14. 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?

#21. You pay the firm's practising certificates from the business account.

When posting the transaction, What VAT rate should you select when posting the payment to the accounting system?

#23. 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?

#32. 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: