It is vitally important to keep the client account up to date. Daily posting is highly recommended and much simpler thanks to the ease of accessing online banking. As we know, situations such as house completions tend to happen in quite a panic on a Friday evening, with clients anxious to get keys before the weekend. At times such as these, mistakes can happen so easily. An accurate, up to date (and up to the minute!) client ledger is essential.
The ledger should be consulted before issuing any payments from the client account. This is in order to both prevent errors that may leave the ledger overdrawn, and also to ensure that upon completion of the ledger, no small outstanding balances are left.
An overdrawn Client Balance is a breach of SAR and needs to be immediately rectified. Mistakes can and will happen, unfortunately, and timely correction is vital. If your postings are not up to date, not only is the breach more likely to happen, it is also less likely to be noticed within a reasonable time. Should a breach span a 6 Month End or Year End accountant’s report, it will come to the attention of the Law Society. Large or repeated breaches can be indicative of poor accounts maintenance an you might well expect a visit from your local Auditor.
Recent Law Society inspections have also paid close attention to Dormant Balances, oftentimes small balances less than €10 left sitting for years. The current Irish Law Society stance on these balances is “Client Monies belong to the Client”, which can leave you with the unenviable task of issuing lots of small cheques or drafts to clear balances. A good way to prevent this scenario is to ensure you have each client’s bank details in order to easily transfer balances to them and ensure your ledgers are cleared. Having your client ledgers up to date when you are closing a file should ensure a minimum of residual balances.
For more on SAR see the Law Society document here