SRA Handbook

Reporting accountant's rights and duties - letter of engagement

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Rule 35: Reporting accountant's rights and duties - letter of engagement

35.1

You must ensure that the reporting accountant's rights and duties are stated in a letter of engagement incorporating the following terms:

"In accordance with rule 35 of the SRA Accounts Rules 2011, you are instructed as follows:

(a)

I/this firm/this company/this limited liability partnership recognises that, if during the course of preparing an accountant's report:

(i)

you discover evidence of fraud or theft in relation to money

(A)

held by a solicitor (or registered European lawyer, or registered foreign lawyer, or recognised body, or licensed body, or employee of a solicitor or registered European lawyer, or manager or employee of a recognised body or licensed body) for a client or any other person (including money held on trust), or

(B)

held in an account of a client, or an account of another person, which is operated by a solicitor (or registered European lawyer, registered foreign lawyer, recognised body, licensed body, employee of a solicitor or registered European lawyer, or manager or employee of a recognised body or licensed body); or

(ii)

you obtain information which you have reasonable cause to believe is likely to be of material significance in determining whether a solicitor (or registered European lawyer, or registered foreign lawyer, or recognised body, or licensed body, or employee of a solicitor or registered European lawyer, or manager or employee of a recognised body or licensed body) is a fit and proper person

(A)

to hold money for clients or other persons (including money held on trust), or

(B)

to operate an account of a client or an account of another person,

you must immediately give a report of the matter to the Solicitors Regulation Authority in accordance with section 34(9) of the Solicitors Act 1974 or article 3(1) of the Legal Services Act 2007 (Designation as a Licensing Authority) (No. 2) Order 2011 as appropriate;

(b)

you may, and are encouraged to, make that report without prior reference to me/this firm/this company/this limited liability partnership;

(c)

you are to report directly to the Solicitors Regulation Authority should your appointment be terminated following the issue of, or indication of intention to issue, a qualified accountant's report, or following the raising of concerns prior to the preparation of an accountant's report;

(d)

you are to deliver to me/this firm/this company/this limited liability partnership with your report the completed checklist required by rule 43 of the SRA Accounts Rules 2011; to retain for at least three years from the date of signature a copy of the completed checklist; and to produce the copy to the Solicitors Regulation Authority on request;

(e)

you are to retain these terms of engagement for at least three years after the termination of the retainer and to produce them to the Solicitors Regulation Authority on request; and

(f)

following any direct report made to the Solicitors Regulation Authority under (a) or (c) above, you are to provide to the Solicitors Regulation Authority on request any further relevant information in your possession or in the possession of your firm.

To the extent necessary to enable you to comply with (a) to (f) above, I/we waive my/the firm's/the company's/the limited liability partnership's right of confidentiality. This waiver extends to any report made, document produced or information disclosed to the Solicitors Regulation Authority in good faith pursuant to these instructions, even though it may subsequently transpire that you were mistaken in your belief that there was cause for concern."

35.2

The letter of engagement and a copy must be signed by you and by the accountant. You must keep the copy of the signed letter of engagement for at least three years after the termination of the retainer and produce it to the SRA on request.

35.3

The specified terms may be included in a letter from the accountant to you setting out the terms of the engagement but the text must be adapted appropriately. The letter must be signed in duplicate by both parties, with you keeping the original and the accountant the copy.

Guidance note

(i)

Any direct report by the accountant to the SRA under rule 35.1(a) or (c) should be made to the Fraud and Confidential Intelligence Bureau.