How to choose a reporting accountant

Robert Blech · Posted on: June 11th 2025 · read

Office building and blue sky

If you unfortunately have a heart condition, you may visit your GP but would hopefully be referred to a cardiologist who has the correct expertise, experience and resources to diagnose and treat you accordingly. The specialist would also advise on how to reduce your risks going forward. 

In the same way, not all accountants and auditors are the same or have equal expertise. Rule 12.5 of the SRA Accounts Rules 2019 stipulates “You ensure that any report obtained under this rule is prepared and signed by an accountant who is a member of one of the chartered accountancy bodies and who is, or works for, a registered auditor”. 

This means that the Accountants Report (AR1) needs to be signed off by a qualified accountant who is either a registered auditor or works for a firm which has that status. It does not stipulate what experience (if any) within the legal compliance sector and Accounts Rules that a person should have.

In the same way that you would not want to visit a dermatologist for a heart condition, a law practice should not get their AR1 prepared and signed by an accountant who is not an expert in this sector. 

Having an accountant who does not have experience in the legal sector can have serious consequences to a number of parties. An inexperienced accountant is not potentially acting with professional competence and due care, which could result in regulatory action in respect of this work. Additionally, if a material breach is not reported as part of a qualified AR1, the SRA have the ability to disqualify the reporting accountant under Rule 12.6 of the Accounts Rules from preparing a report in the future.

Taking this step further, this is high risk work, and an incompetent reporting accountant may find themselves with an insurance claim to defend. If for instance there was a large shortfall in client funds which not identified and reported by the accountant, which subsequently  increases, there is insurance exposure. The insurer may conclude that the reporting account has been negligent in the increase in the loss during the period since they signed the AR1 in which they failed to identify the shortfall and the point of discovery.

Rule 12.5 of the SRA Accounts Rules 2019 stipulates 'You ensure that any report obtained under this rule is prepared and signed by an accountant who is a member of one of the chartered accountancy bodies and who is, or works for, a registered auditor'.

Robert Blech  Partner

The law firm will face consequences of this as well, which can in certain cases lead to referral to the Solicitors Disciplinary Tribunal (SDT) or ultimately intervention.

"Whilst it is the solicitor and law firms’ responsibility to comply with the Accounts Rules, without a competent reporting accountant, they may believe their systems and controls over client money is sufficient to protect it, when in reality it is not."

Robert Blech, Partner

Going back to the medical metaphor, prevention is always better than cure, and so law firms should ensure they have reporting accountants and advisors who have the expertise and experience in this sector. Such accountants should also offer recommendations on the practice’s control system and wider areas of financial compliance. 

In conclusion, it would be beneficial for numerous reasons if the SRA considered providing certain reporting accountants with an accreditation or kitemark, so law firms are in a position to make an informed decision when making an appointment. 

This may be based on a statistical approach such as the number of reports prepared and qualified by the reporting accountant, the length of time they have worked in the area, and how well they are known to the SRA and within the wider legal compliance sector. 

Share this article
Related tags