Inspections & investigations
Introduction
Rule 19 of the Solicitors (Scotland) Accounts etc Rules 2001
authorises the Society to carry out inspections and investigations
into the books, records and conduct of law firms in Scotland. This
function is delegated to the Financial Compliance Department.
The focus and objectives of our inspection process are:
- to assess compliance with the accounts rules
- to identify risks to the profession and public arising from
non-compliance with the accounts rules, and to assist firms in
dealing with these
- to provide assurance to the profession and the public that the
Society is protecting their interests by reducing risk through
early intervention, where there are conduct and compliance
issues
- to advise firms on their systems and procedures, in order to
achieve compliance and meet best practice targets
- to ensure the advice and guidance issued to the profession
deals with current issues
Generally, firms 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. Firms will normally receive two weeks'
notice, although the rule only requires that 48 hours written
notice be given.
In certain circumstances, the Council has the power to authorise a
wider investigation into the conduct of the firm and the solicitor,
and, if urgent action is required, to dispense with the requirement
of notice altogether.
Inspection process
Before the inspection
Prior to the inspection, firms will be asked to complete a
pre-visit questionnaire. This information allows for more efficient
planning of the inspection and helps the team understand the issues
affecting the firm.
Our visit
During the inspection, a series of checks will be performed to
verify the accuracy of the firm's accounting information. The
firm's systems and procedures will also be assessed and a small
sample of files selected for review. This information will allow
the compliance team to identify any specific breaches and areas for
development.
As part of the inspection, the team will assess compliance with
the Client Communication Practice Rules
2005 and, if the firm 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 partner and the compliance team, at which the
firm will be advised of the 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 the team to proffer
advice.
Correspondence
In most instances, further information will be requested by
letter following the inspection. The correspondence process allows
the firm to seek further guidance on accounts rules breaches and to
reassure the Society that any underlying issues have been
addressed.
Guarantee Fund Committee
Occasionally, it will be necessary to refer the inspection
report and subsequent correspondence to the Guarantee Fund
Committee for review. Firms will usually be advised of this step
and we encourage firms 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. Firms will be
advised of the committee's decision in writing following the
meeting.
Feedback
We welcome feedback from firms following an inspection and each
firm is given the opportunity to complete the department's feedback
form. While the feedback is generally positive, we will
contact firms to discuss any significant improvement opportunities
identified during the feedback process.