SRA Accounts Rule 8 (Reconciliations): the one habit COFAs can’t afford to miss

Bookkeeping, Compliance - 23/10/2025

If your firm holds client money, Rule 8 of the SRA Accounts Rules is your daily bread. It’s the rule that forces firms to keep proper books and reconcile the client account at least every five weeks—a simple rule that when missed, is often what turns an innocent error into an SDT (Solicitors Disciplinary Tribunal) headline.

What the rule actually requires (in plain English)

Rule 8.1–8.3 require you to:

• Keep accurate, continuous, chronological accounting records showing all dealings with client money. (Solicitors Regulation Authority)
• Perform a three-way reconciliation at least every five weeks for every client account: (1) bank statement balance, (2) cashbook balance, and (3) total of client ledger balances. A COFA or manager must sign off the reconciliation, and any differences must be promptly investigated and resolved. (Solicitors Regulation Authority)

Why it matters: recent SDT outcomes frequently cite failures around reconciliations and basic record-keeping as foundational breaches—even where there’s no dishonesty. In 2024–25 decisions, the Tribunal emphasised the five-week reconciliation duty and criticised shortages that went undetected because reconciliations were late, incomplete or unsigned. (Solicitors Disciplinary Tribunal)

How to follow Rule 8 in practice (practical, not theoretical)

1) Lock in the five-week cycle

• Set a firm-wide schedule (e.g., the first working week of every month) so you never exceed 35 days.
• Reconcile each separate client account (including designated deposit accounts).
• Use a standard reconciliation pack: bank statements, cashbook print, client ledger list, break sheet for differences, COFA sign-off page. (Solicitors Regulation Authority)

2) Make it truly “three-way”

• Don’t stop at bank vs cashbook. Always agree the total of all client ledgers to the cashbook and to the bank. Investigate timing differences (uncleared items), stale office-to-client transfers, and posting errors the same day. (Solicitors Regulation Authority)

3) Evidence COFA oversight

• The COFA (or a manager) must sign and date every reconciliation and record the actions taken on any discrepancies. Where a shortage is discovered, record root cause, corrective entries, and client impact. (guidance.sra.org.uk)

4) Build a tidy audit trail

• Keep reconciliation packs in a single folder per month/matter, with cross-references to journal entries. The SRA’s guidance on accurate client accounting records is a good benchmark for what your file should show at a glance. (Solicitors Regulation Authority)

5) Tie reconciliations to residual balances housekeeping

• Use the monthly process to flag residual client balances; Rule 2.5 expects you to return client money promptly once there’s no reason to hold it. Where over £500 can’t be returned despite reasonable steps, you must apply to the SRA for authority to withdraw. Align reconciliations with a standing residual-balance review. (Solicitors Regulation Authority)

Common pitfalls (and what recent cases tell us)

Missed or late reconciliations.

Firms sometimes treat “five weeks” as elastic. The SDT has underlined that it isn’t: failures to complete timely, signed reconciliations—and to act on differences—have supported breaches of Rule 8.3 and wider Principles, particularly when shortages later emerge. (Solicitors Disciplinary Tribunal)

Unsigned packs or rubber-stamped oversight.

A reconciliation without COFA sign-off doesn’t meet the rule. Even where staff reconcile, the COFA’s documented review is what demonstrates governance. Recent decisions emphasise management responsibility when oversight is nominal. (guidance.sra.org.uk)

Two-way (not three-way) checks.

Reconciling only bank to cashbook misses ledger posting errors and orphan balances. The SRA’s guidance stresses complete, contemporaneous records that clearly link postings to ledgers—your three-way check is the control that catches divergences early. (Solicitors Regulation Authority)

Letting residual balances accumulate.

Residual client money often surfaces during reconciliation but then languishes. Rule 2.5 requires prompt return; failing that, follow the SRA process for withdrawals over £500. Reconciliations should drive action lists for fee-earners to resolve these items each month. (Solicitors Regulation Authority)

Treating AML and accounts as separate worlds.

While AML breaches sit under different rules, SRA enforcement in 2024–25 shows regulators expect joined-up financial controls—weakness in one area often correlates with weakness in another. High-profile outcomes underline the cost of gaps in basic financial governance. For COFAs, a disciplined reconciliation regime is part of the wider risk-management picture. (Reuters)

A quick, reusable checklist for COFAs and partners

• Reconciliations completed every ≤35 days for each client account
• Three-way agreement (bank, cashbook, ledger total) with a dated, signed COFA page
• All differences investigated promptly with evidence of resolution
• Monthly residual balance report with actions (return, offset, or SRA authority)
• Centralised reconciliation packs with cross-referenced journals and approvals

Nail these five habits and you’ll satisfy the letter of Rule 8 and the spirit of sound client-money stewardship—reducing the chance that a small posting error becomes your firm’s next regulatory headache.

How Numero can help

At Numero, we make compliance seamless. Our team provides daily reconciliations, regular reviews of unreconciled items, and monthly residual balance reports delivered directly to those who need them most.

Outsourced Cashiering with Numero fits firms of every size, embedding compliance into your daily routine—so it’s part of how you operate, not an afterthought.

Outsourced Legal Cashiering | Numero Accounts Services Ltd