Solicitors Accounts Regulations 2023
New Solicitors Accounts Regulations came into operation on 1 July 2023 and apply to accounting periods beginning on or after that date. This means that the reporting accountant's reports will impact solicitors who have year ends of 30 June 2024 or later. Many practices have December 2024 year ends and, therefore, the updates in respect of reporting to the Law Society of Ireland will apply to those practices in early 2025.
The previous Solicitors Accounts Regulations were introduced in 2014, and while the new regulations build on the 2014 regulations, there are some notable changes. The aim of the 2023 regulations is to provide more protection for client moneys and update provisions of the 2014 regulations that were considered unclear or insufficient.
Generally, the regulations deal with client accounts, controlled and non-controlled trust accounts, insolvency arrangement accounts and certain office account transactions. From the reporting accountant's perspective, the regulations set out our requirements regarding the examination of accounting records and reporting to the Law Society of Ireland.
Some of the key changes that will impact practices from an accounting compliance perspective are that:
- Balancing statements are to be prepared every three months in respect of client account transactions. Previously, these were required every six months.
- Submission of the reporting accountant's report has a five-month deadline rather than the previous six-month deadline.
This means that a practice with a year end of December 2024 will need to prepare quarterly balancing statements and will also need to arrange for their reporting accountant to complete their work a month earlier than usual as the deadline for submission of the report to the Law Society of Ireland for that practice will be the end of May 2025.
Many solicitors will be glad to note that moneys received by a solicitor acting as a personal representative of an estate now falls under the definition of client moneys. This will mean that estate funds are to be lodged into the solicitor's client account, as opposed to opening separate bank accounts. This should enable easier administration of the management of funds held by practices.
Due to the regulation changes, it's important for solicitors to liaise with their reporting accountant in advance of their year end to ensure that there's clarity in respect of what's being reported and by when the reports are due.
If you would like more information on how the regulation changes may impact your practice, Nigel and Aidan are available for a confidential discussion.
