Outcomes focused regulation (OFR) has been applied by the Solicitors Regulation Authority (SRA) since 6 October 2011. After several deadlines the role of Compliance Officer for Finance and Administration (COFA) finally came into effect on 1 January 2013. Whilst many COFAs will undoubtedly have been previously involved in the SRA accounts rules and financial accounting aspects of their firm, for some this new role may seem a little daunting at first.
Therefore to help you settle into this role Menzies LLP have put together a series of guidance notes covering some of the keys areas which should be considered.
The vast majority of firms will by now have already appointed a COFA who should be approved by the SRA. There were, however, some 600 firms who had not appointed a COFA by the January 2013 deadline! We hope none of you are in this category?!
Replacement – be aware if your COFA resigns their position you will need to inform the SRA, designate another manager or employee to replace the previous COFA and make an application to the SRA for temporary approval of the new COFA, within seven days.
Whether you are a partner or an employee it would be sensible to have, in the case of a partners, a separate agreement or if an employee part of your employment contract, a job description and terms of appointment. This should incorporate your right to have access to all appropriate information and that you are indemnified for any costs or action arising from any of the reporting requirements.
Whilst some firms have been preparing a breaches register for a number of years, for the vast majority this needs careful consideration. This will have to be produced for any SRA visit and your accountant will, undoubtedly, ask for a copy of the register!
Although the SRA have not yet prescribed the format of your annual report, we would recommend that the format for the register at least includes the date reported, who by, the client name and matter “..some 600 firms who had not appointed a COFA…” reference, the amount involved and nature of the breach, whether the breach has been rectified and if so when, whether the breach is material (we will explore the definition of material more fully in our next article) or part of a pattern and whether action was taken to prevent recurrence. Finally, has the breach been reported to the SRA?
COFA compliance plan
There are various elements to your role from carrying out regular checks on the accounting system to ensuring that the firm has written policies on interest and withdrawals from client account. A COFA compliance plan documents the work you should consider to fulfil your role. It is recommended this is fully documented and do let us know if assistance or a review of your own is required.
Following the implementation of the new rules on 6 October 2011 the firm should have:
- (a) A written interest policy which is drawn to the attention of all clients and seeks to provide a fair outcome under SAR interest Rule 22.3. Despite this rule being in place for eighteen months we are still coming across firms with either no or poorly worded interest policies.
- (b) A written policy governing withdrawals from client bank accounts under SAR Rule 21.2.
If you would like an example of a COFA job description or assistance with the breaches register, please feel free to contact Peter Noyce at firstname.lastname@example.org or your regular Menzies Relationship Partner.
Our next article with look at SRA accounts rules breaches, the term material in more detail, reporting requirements and a Top 10 help list to avoid common breaches.
This publication has been prepared as a guide and is not intended as advice. No responsibility can be accepted by Menzies LLP for any loss from acting or refraining from acting as a result of any material in this publication.