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Case Study (1) – Risk of Intervention




A sole practitioner (Firm A) had received a visit from the Solicitors Regulation Authority (SRA) following a self-report. Historically the books of accounts had been done by an untrained/unqualified individual who was no longer at the practice.   


Background


The SRA discovered during their visit that Firm A’s books of accounts had not been maintained to a satisfactory standard, notwithstanding the fact that Firm A sought support from their reporting accountant.


Despite Firm A’s best efforts they were unable to resolve the 300 unreconciled client accounting entries identified by the SRA’s Forensic Investigator.  The incomplete records also made it difficult to complete the three-way bank reconciliation’s every 5 weeks. Firm A were at a dead end and the SRA were looking to exercise their rights for an intervention.


Issue


It was difficult to see how Firm A would be able to resolve the unreconciled items as their reporting accountants had already exhausted all avenues available to them.  Unable to provide satisfactory responses to the SRA during their investigation and unable provide full accounting records, a date for the intervention was set. 


Solution


Firm A instructed a specialist regulatory solicitor who had previously worked alongside a member of BlueSky and he initiated the first part of their road to a solution - a phone call with James and Sarah.


The challenge was accepted!


Step One was to visit Firm A to complete a basic finance compliance health check to ascertain any weaknesses and the scale of the issue.  It was good news, with time and expertise BlueSky were confident that they could satisfy the SRA’s concerns.


Step Two was to deliver a finance compliance plan on how this could be achieved and over what time scale.  The plan was focused around Resolving – Training - Supervision.  The SRA were prepared to give BlueSky 12 weeks to turn things around and even cited BlueSky’s experience as a significant reason for their decision. #GoBlueSky


Step Three now we had to deliver on our promise!  BlueSky co-founder, James Wright, led the project. It was great to be able to advise the SRA within the first compliance update that 80% of the anomalies had been resolved and the remaining 20% were resolved by the second compliance update.  James setup a training schedule to upskill the COFA and Legal Cashier.  This included ongoing coaching. 

 

Conclusion


One of the issues of being a sole cashier in a small firm is the difficulty to draw on the right expertise or the experience of others, which can be a benefit in larger firms.  In smaller firms quite often the COFA doesn’t have a hands-on role with the finance team, as their primary role is being a lawyer and principal.


On the initial visit BlueSky also identified that incorrect guidance had been provided by their Reporting Accountants.  We work with reporting accountants who have specialist teams and are highly regarded in this field. 


It was extremely rewarding to have been able to deliver on all aspects of the criteria issued by the SRA and to provide Firm A with the opportunity to continue to practice.

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