Funds held on behalf of clients.
WHY IT REQUIRES SPECIAL TREATMENT
Money held for a client is not the firm's, and professional rules govern it strictly.
WHAT TO ESTABLISH
Whether your profession permits holding client money, and under what rules.
WHAT THE RULES TYPICALLY REQUIRE
Separate designated accounts No mixing with firm money Records identifying each client's balance Reconciliation at defined intervals Restrictions on withdrawals Prompt payment out when due
WHY SEPARATION IS ABSOLUTE
Using client money for firm purposes is among the most serious professional breaches.
WHAT TO NEVER DO
Fund firm costs from client balances Transfer between client balances Delay payment out
WHY DELAY MATTERS
Holding money longer than necessary is itself a breach in many regimes.
WHAT TO ESTABLISH ABOUT TRANSFERS TO THE FIRM
That fees are transferred only when properly billed and due.
WHAT RECONCILIATION REQUIRES
Client account balance against the sum of individual client balances At defined intervals Investigated and corrected immediately where they differ
WHY IMMEDIATELY
Unexplained differences indicate error or misappropriation.
WHAT TO ESTABLISH
Who reconciles, and that it is not the person operating the account alone.
WHY SEPARATION OF DUTIES
Single-person control over client money is where losses occur.
WHAT TO RECORD
Every receipt and payment, identified to a client and matter.
WHAT TO PROVIDE CLIENTS
Statements of money held and its movement.
WHAT TO KEEP
Complete records for the required period.
WHAT TO REPORT
Per your regulator's requirements.
