SRA Audit Checklist: What to Expect and How to Prepare

Most SRA audits do not uncover major issues — they expose small inconsistencies that have developed over time. An SRA audit checklist helps identify those gaps early, before they become regulatory problems.

In practice, audits focus on how your firm handles client money, maintains records and demonstrates compliance under scrutiny. While many solicitors understand the rules, issues often arise where processes are not applied consistently or clearly documented.

This guide sets out a practical SRA audit checklist, explaining what is reviewed, where firms commonly fall short and how to prepare with confidence.

What does an SRA audit checklist cover?

An SRA audit checklist typically focuses on five core areas:

• Client account handling and compliance
• Financial records and reconciliations
• AML procedures and risk management
• Internal systems and controls
• Reporting and accountant’s reports

Each area links closely to the others. As a result, weaknesses in one often highlight broader issues across the firm.

Why SRA audits matter more than most firms expect

At first glance, an audit may appear to be a technical review of compliance with the Solicitors Accounts Rules. However, in reality, it is a test of how well your systems operate day to day.

For example, a firm may have the correct procedures in place. However, if those procedures are applied inconsistently, or cannot be clearly evidenced, this can quickly become an issue during review.

Importantly, most audit findings are not caused by complex errors. Instead, they tend to arise from small gaps — such as delayed reconciliations, unclear narratives or incomplete audit trails — that build over time.

Client account compliance in an SRA audit checklist

Handling client money correctly remains central to every SRA audit.

Key areas to review

✔ Keep client money separate from office money at all times
✔ Record receipts and payments promptly and accurately
✔ Only transfer funds between client and office accounts where permitted under the SRA Accounts Rules and properly supported
✔ Maintain clear and accurate client ledger balances
✔ Review and clear residual balances regularly
✔ Ensure no client ledger shows a debit balance at any time

Why this matters – Even minor breaches in client account handling can raise significant regulatory concerns.

In practice

Many firms follow the correct processes. However, timing differences, posting errors or unclear descriptions can still create inconsistencies. Over time, these issues become more visible, particularly when reviewed externally.

To understand this area in more detail, see our guidance on SRA Accounts Rules and compliance:

Financial records in an SRA audit checklist

Accurate records form the foundation of audit readiness.

Key areas to review

✔ Perform three-way reconciliations at least every five weeks, in line with SRA requirements
✔ Investigate and resolve any differences promptly, with clear documentation of the cause and resolution
✔ Maintain a clear audit trail for all transactions
✔ Retain supporting documentation
✔ Ensure balances can be explained quickly if required

Why this matters – If records do not align, it becomes difficult to demonstrate control over client money.

In practice

Firms often complete reconciliations as required. However, delays in resolving differences can create unnecessary risk. As a result, even small discrepancies may lead to further questions during an audit.

AML checks within an SRA audit checklist

AML procedures form a key part of wider compliance expectations.

Key areas to review

✔ Apply client due diligence consistently
✔ Complete and update risk assessments
✔ Document source of funds and, where appropriate, source of wealth in line with AML regulations
✔ Monitor higher-risk matters appropriately
✔ Ensure staff training is up to date

In addition, firms must maintain an up-to-date firm-wide risk assessment and ensure AML policies and procedures reflect current requirements under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (as amended).

Why this matters – AML compliance supports broader regulatory expectations around risk, governance and client management.

Common issue

Policies are often in place, but application varies between matters or individuals. Therefore, it is essential that AML procedures are evidenced at file level, not just documented at firm level.

For further guidance, refer to the Law Society’s AML audit guidance: https://www.lawsociety.org.uk/topics/anti-money-laundering/audit-trail-preparing-for-an-aml-visit

Systems and internal controls

An SRA audit checklist does not just assess what your firm does — it considers how consistently those processes operate.

Key areas to review

✔ Standardise processes across the firm
✔ Clearly define roles and responsibilities
✔ Ensure systems support consistent application of controls across the firm
✔ Maintain oversight and review procedures
✔ Record and track adjustments clearly
✔ Oversight should sit at an appropriate level of seniority to ensure effective governance and accountability.

Why this matters – Where processes vary between individuals, it becomes more difficult to demonstrate control.

In practice

Many firms rely on experienced individuals to manage key processes. However, this can create risk if those processes are not embedded into systems. As a result, consistency becomes harder to maintain.

Reporting and accountant’s reports

The accountant’s report reflects how effectively your systems and records operate in practice.

Key areas to review

✔ Ensure records support reported figures
✔ Keep reconciliations up to date and documented
✔ Record any breaches of the SRA Accounts Rules clearly, including whether they are material and reportable
✔ Organise documentation for easy access
✔ Prepare for follow-up queries
✔ Material breaches should be reported to the SRA in line with regulatory requirements.

Why this matters – The report highlights issues — it does not create them.

In practice

Difficulties often arise where information is technically complete but not clearly structured. Consequently, firms may struggle to evidence positions quickly during review.

For official guidance, see SRA requirements for accountant’s reports: https://www.sra.org.uk/solicitors/guidance/planning-completing-accountants-report

Where firms commonly fall short

Most issues identified during an SRA audit checklist review stem from inconsistency rather than complexity.

Common patterns

• Processes applied differently across teams
• Delayed or incomplete reconciliations
• Weak or unclear audit trails
• Over-reliance on key individuals
• Outdated policies or training
• Failure to identify or report breaches where required

Pre-audit readiness — at a glance

Area	What to check	Risk if missed
Reconciliations	Up to date and supported	Audit qualification
AML	File-level evidence present	Regulatory scrutiny
Controls	Consistent across teams	Systemic weaknesses
Records	Clear audit trail	Delays and queries

How Nichols & Co can help

SRA audits rarely cause issues because firms do not understand the rules. Instead, they arise where systems, records or processes do not stand up to scrutiny.

We work with solicitors and law firms to identify gaps early, strengthen internal controls and ensure compliance is clearly evidenced.

You can explore our specialist support for solicitors and law firms here. You may also find our insights on SRA audit requirements in practice helpful

If you would prefer to discuss your position directly, you can contact our team in confidence

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