Every Scottish law firm is audited by our Financial Compliance Team every three years or more as part of a rolling programme.
Compliance inspections are an important protection for the public and the profession.
Our video gives a step-by-step guide to preparing for an inspection and what happens during and following an inspection
Before the inspection
Prior to the inspection, practice units will be asked to complete a pre-visit questionnaire. This information allows for more efficient planning of the inspection and helps our team understand the issues affecting your practice unit.
During our visit
During the inspection, a series of checks will be performed to verify the accuracy of your practice units' accounting information. The practice units' systems and procedures will also be assessed and a small sample of files selected for review. This information will allow our compliance team to identify any specific breaches and areas for development.
As part of the inspection, our team will assess compliance with the client communication practice rules 2005 and, if your practice unit is licensed to carry out incidental financial business, the incidental financial business practice rules 2004.
The inspection will usually conclude with a meeting between the designated cashroom manager and our compliance team, at which your practice unit will be advised of our team's findings. This is a useful opportunity for both parties to seek clarification, for the firm to provide comment at an early stage and for our team to offer advice.
Correspondence
In some instances, further information will be requested following the inspection, after approximately 2 months. This can be either by letter to the practice unit, asking for details of the action taken to address any matters to be forwarded, or by way of a follow-up visit to review the action taken by the practice and to check any matters on site. The follow-up process allows the practice unit to seek further guidance on accounts rules matters and to reassure us that any underlying issues have been addressed.
Client protection sub-committee
Occassionally, it may be necessary to refer the inspection report and subsequent correspondence to the client protection sub-committee for review. Practice units will usually be advised of this step and we encourage you to provide as much of the requested information as possible prior to the committee meeting.
The committee has a number of options available to it in the event that further action is required. For example, the committee may decide that an early re-inspection is justified or that it is appropriate to invite the partners to attend an interview meeting. The committee may also decide to pursue a complaint. Practice units will be advised of the committee's decision in writing following the meeting.
Rule B6.18 of the Solicitors (Scotland) Accounts etc Rules 2001 authorises us to carry out inspections and investigations into the books, records and conduct of all practice units in Scotland in order to:
- assess compliance with the accounts rules
- identify risks to the profession and public arising from non-compliance with the accounts rules, and to assist practice units in dealing with these
- provide assurance to the profession and the public that we are protecting their interests by reducing risk through early intervention, where there are conduct and compliance issues
- advise practice units on their systems and procedures, in order to achieve compliance and meet best practice targets
- ensure the advice and guidance issued to the profession deals with current issues
Generally, practice units will be notified in advance of our intention to inspect their books and records. This allows firms to ensure the availability of staff and accounting information, as well as deal with office logistics. Practice units will normally receive three week's notice, although the rule only requires that 48 hours' written notice be given.
In certain circumstances, the Law Society of Scotland Council has the power to authorise a wider investigation into the conduct of the practice unit and the solicitor, and, if urgent action is required, to dispense with the requirement of notice altogether.
