Question: "A solicitor practice has a year end of 31 July. They had a very competent bookkeeper but she retired in January 2011. The replacement bookkeeper was not really up to the job and left in October 2011 when the previous one came back and sorted things out. She is now staying.
What should we do about risk assessment and sample sizes?"
Read this FAQ in full...
Question: We are not sure how to deal with client monies in the following:
1. Solicitors – some of them we shown clients money under current assets and matter balances under current liabilities and some we don’t show client information at all (in all cases they will match to zero) – never thought it a problem before but one of our solicitor clients is thinking of moving to LLP or Ltd Co status – if we have the client balances in then we could, quite easily, break the gross assets limits and an audit will be required – can you explain the correct treatment?
2. Insurance agent – they receive monies from brokers – they deduct their agreed % commission and pass the monies on to the main insurance company – they are not required to be audited under FSA regulations due to business type and the fact that all the risks involved are transferred to the larger insurance companies. We show all the balance sheet elements gross in the accounts yet we only show their commission element in the profit and loss account – how should this be shown?
3. This could even be carried into our own accounts where we hold client monies but never show this within our gross assets in our balance sheet yet the bank account is in our name – again should we?
Can you explain the correct treatment in each case including your rationale.
Read this FAQ in full...
Question: I am completing the audit of an insurance broker.
Their year end client resource calculation shows a deficit due (they say) to timing difference of charges taken in advance from customers.
They did not make a transfer from office to cover the deficit because they argue it is not a true deficit, however there is nothing to back this up.
They are struggling to produce an historic report from their software to backup their assertion.
All subsequent monthly reconciliations have shown a surplus.
Am I correct in saying that if the year end calculation shows a deficit and there is no transfer for the shortfall, we will have to qualify ?
If they provided an estimate of the figure for the timing difference can we accept it or do we need an exact report to prove there was no deficit ?
Read this FAQ in full...
Question: An insurance broker deals with client monies and a report is made to the FSA.
It also has a statutory audit as the gross assets exceed £4m. However, about £3m of this is client money. Is it possible to adjust for this fact when determining whether the company exceeds the gross assets threshold?
Read this FAQ in full...
Question: During a recent solicitors rules audit one breach was found, whereby interest due to the client exceeded the £20 de-minus limit, £22 to be exact.
I just wanted to confirm that the new ‘reasonable’ rules do not come into effect until after 6th October 2011. Consequently is it right to include this breach on the report?
Read this FAQ in full...