SRA Handbook

Accounting periods

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Rule 33: Accounting periods

The norm

33.1

An "accounting period" means the period for which your accounts are ordinarily made up, except that it must:

(a)

begin at the end of the previous accounting period; and

(b)

cover twelve months.

Rules 33.2 to 33.5 below set out exceptions.

First and resumed reports

33.2

If you are under a duty to deliver your first report, the accounting period must begin on the date when you first held or received client money (or operated a client's own account as signatory), and may cover less than twelve months.

33.3

If you are under a duty to deliver your first report after a break, the accounting period must begin on the date when you for the first time after the break held or received client money (or operated a client's own account as signatory), and may cover less than twelve months.

Change of accounting period

33.4

If you change the period for which your accounts are made up (for example, on a merger, or simply for convenience), the accounting period immediately preceding the change may be shorter than twelve months, or longer than twelve months up to a maximum of 18 months, provided that the accounting period shall not be changed to a period longer than twelve months unless the SRA receives written notice of the change before expiry of the deadline for delivery of the accountant's report which would have been expected on the basis of your old accounting period.

Final reports

33.5

If you for any reason stop holding or receiving client money (and operating any client's own account as signatory), you must deliver a final report. The accounting period must end on the date upon which you stopped holding or receiving client money (and operating any client's own account as signatory), and may cover less than twelve months.

Guidance notes

(i)

In the case of persons joining or leaving a continuing partnership, any accountant's report for the firm as a whole will show the names and dates of the principals joining or leaving. For a person who did not previously hold or receive client money, etc., and has become a principal in the firm, the report for the firm will represent, from the date of joining, that person's first report for the purpose of rule 33.2. For a person who was a principal in the firm and, on leaving, stops holding or receiving client money, etc., the report for the firm will represent, up to the date of leaving, that person's final report for the purpose of rule 33.5 above.

(ii)

When a partnership splits up, it is usually appropriate for the books to be made up as at the date of dissolution, and for an accountant's report to be delivered within six months of that date. If, however, the old partnership continues to hold or receive client money, etc., in connection with outstanding matters, accountant's reports will continue to be required for those matters; the books should then be made up on completion of the last of those matters and a report delivered within six months of that date. The same would be true for a sole practitioner winding up matters on retirement.

(iii)

When a practice is being wound up, you may be left with money which is unattributable, or belongs to a client who cannot be traced. It may be appropriate to apply to the SRA for authority to withdraw this money from the client account - see rule 20.1(k) and guidance note (vi)(a) to rule 20.