Residual Client Balance is a matter that can affect the image of a firm so easily regarding the process of holding client money. This article is for a practitioner who is holding the client’s money such as Compliance Officer for Finance and Administration as well as for those firms who are dealing with the client money. Plus, this guidance is specifically relevant to the accountants who assemble request letters and forms on the behalf of such firms. Dealing with these balances is not easy to maintain and handle because of different situations undoubtedly occurs when it is required to deal with a residual balance and these things need to be managed according to the rules and regulations that are given.
If the residual money in individual clients accounts go beyond the limit of £500 then the application must be transfer to the SRA. The application must also be transferred if the firm wishes to transfer a small amount of money and also wants to hold it. This situation only happens when the outstanding cost of the firm and the bills are proved beyond the bound of possibilities because the client is not in reach. So in both cases, the firm must explain everything regarding the steps they are taking to identify the real owner of the money to return it. There are following rules of accounting such as 20(1)(j) and 20(2) which needs to be followed by the firm while dealing with residual balances.
Firms are required to establish the recognition of the real owner of the money. If in case you fail to identify the owner of the money then the funds should be paid to a charity. This is the time-consuming process of residual balances, especially when finding the right owner of the money. The SRA provides some guidance through which a firm can find the right client and owner of the money. Such as:
· The age of the residual balance
· The amount held by the firm
· Client information must be available for this
· Certain cost occurs in the tracing process
Teaming and Lading refers to the bookkeeping fraud which is also known as short banking, lapping, and delayed accounting. Let me explain it briefly, it is the method in which a person who manages and handles the cash for some days and record the transaction after some days. Likewise, when they receive the transaction from the client the person who deals with the cash does not deposit it at the same time and even utilize that money for personal use. And when another depositor come to deposit the money he will deposit that money against the first transaction and he does not show the new amount on record. And this circle process continuously. To overcome this kind of fraudulent activity, the auditors of the firm need to pay special attention to verify and identify the Teeming and Lading process and strong strategies are used to stop this.
Accountant report is considered as accounting report given by the Accountant of the firm or company. This report is compiled with all the financial pieces of information and these details are taken from the accounting records of the business. The things include in this report are the Balance Sheet of the Company, Income Statement of the Company, and Cash Flow Statements of the Company. The accountant is liable for many activities which requires experience and training to get an expert in a particular field. The accountant report is designed to intangled the matters of the firms.