Handling client money brings significant responsibilities for any law firm. While finance tasks can be delegated or outsourced, regulatory responsibility remains firmly with the practice.
So, what is a COFA, and what does the role involve?
A Compliance Officer for Finance and Administration (COFA) oversees a firm’s compliance with the SRA Accounts Rules. The role helps protect client money and supports effective financial controls across the practice.
What is a COFA responsible for?
A COFA has an important oversight role within an SRA-regulated law firm. The Solicitors Regulation Authority states that COFAs have responsibilities relating specifically to compliance with the SRA Accounts Rules.
Typical responsibilities include:
- Overseeing compliance with the SRA Accounts Rules;
- Helping ensure accurate accounting records are maintained;
- Reviewing client account reconciliations;
- Monitoring the handling of client money;
- Maintaining appropriate breach records;
- Ensuring identified breaches are investigated;
- Promoting robust financial controls;
- Supporting relevant staff training; and
- Reporting matters to the SRA where required.
The COFA does not need to complete every finance task personally. However, effective oversight depends on having reliable processes, accurate information and clear reporting arrangements.
Does every law firm need a COFA?
SRA-authorised firms are required to operate with appropriate compliance officers, including a COFA for finance and administration. The individual nominated for the role must receive SRA approval before taking up the position.
Importantly, appointing a COFA does not transfer all responsibility for financial compliance to one person. The SRA Accounts Rules also place responsibilities on authorised bodies, their managers and employees.
Who can become a COFA?
A COFA should have sufficient seniority, responsibility and authority within the firm to carry out the role effectively.
Depending on the practice, this might be a: partner, director, owner, finance director, or senior manager.
The SRA considers whether proposed compliance officers have sufficient authority and the ability to report regulatory breaches without inappropriate restrictions.
Day-to-day bookkeeping and legal cashiering can still be handled by an internal finance team or outsourced provider. However, the firm must retain suitable oversight and controls.
COFA vs COLP: what is the difference?
Although the roles work closely together, their areas of responsibility differ.
A COFA focuses primarily on compliance with the SRA Accounts Rules, including client money and financial systems.
A Compliance Officer for Legal Practice (COLP) has wider responsibilities relating to the firm’s regulatory obligations and legal practice.
Together, the roles form an important part of a firm’s compliance and governance framework.
What financial controls should a COFA have in place?
Good COFA oversight depends on documented procedures rather than informal knowledge held by a small number of people.
Depending on the firm’s size and activities, we would expect clear procedures covering areas such as:
- Client account operation;
- Office account procedures;
- Three-way reconciliations;
- Client-to-office transfers;
- Residual client balances;
- Payment authorisation;
- Breach reporting;
- Interest on client money;
- Month-end procedures;
- Finance delegations; and
- Staff training and periodic control reviews.
Under the SRA Accounts Rules, firms must maintain appropriate client accounting records and complete client account reconciliations at least every five weeks. Differences identified during reconciliations should be investigated and resolved promptly.
Common COFA and finance control mistakes
In our work with law firms, strong financial compliance usually comes from consistent processes rather than relying on a year-end review.
Common weaknesses can include:
- Failing to investigate reconciliation differences promptly;
- Allowing finance procedures to become outdated;
- Poor segregation of duties;
- Inadequate documentation;
- Weak oversight of outsourced or delegated tasks; and
- Treating compliance as an annual exercise.
Consequently, regular reviews can help a COFA identify weaknesses before they develop into larger compliance problems.
Building stronger financial compliance
A proactive COFA does far more than supervise bookkeeping. The role supports the protection of client money and helps ensure that a firm’s finance function operates within the SRA’s regulatory framework.
At AM Strategic, we support law firms with legal cashiering, three-way reconciliations, SRA Accounts Rules compliance, finance process reviews, management reporting and outsourced finance support.
If your COFA needs stronger financial controls, additional finance expertise or an outsourced legal finance function, book a consultation with AM Strategic to discuss how we can support your firm.
Frequently Asked Questions
1. Can a COFA also be a COLP?
Yes. The same individual may hold both positions where appropriate, provided they have the necessary authority, capability and SRA approval to perform both roles effectively.
2. Is the COFA personally responsible for every accounting mistake?
No. The role involves oversight of the firm’s compliance with the SRA Accounts Rules rather than personal responsibility for every administrative error. However, a COFA should ensure that issues are identified, investigated and addressed appropriately.
3. How often should a COFA review compliance with the SRA Accounts Rules?
Compliance should be monitored throughout the year. In particular, the SRA Accounts Rules require client account reconciliations at least every five weeks, with differences investigated and resolved promptly.
4. Does a COFA need to be a solicitor?
Not necessarily. The SRA’s approval process allows individuals who are not SRA-authorised to be nominated, although the proposed COFA must meet the relevant suitability and approval requirements.
5. Can a law firm outsource finance work if it has a COFA?
Yes. Firms can use internal teams or outsourced finance providers for day-to-day finance work. However, outsourcing does not remove the firm’s regulatory responsibilities, so the COFA still needs suitable oversight, controls and access to accurate financial information.
Adam Bent is a trusted financial leadership expert with 30 years of experience helping startups and small to medium-sized businesses achieve faster growth. He guides companies to success through strategic financial planning and implementation, using his expertise to build actionable turnaround plans for businesses in financial distress.
Having seen many entrepreneurs with great ideas struggle due to a lack of financial expertise, Adam specialises in translating vision into viable, practical financial models, offering dedicated support every step of the way.
Driven by the reward of seeing businesses thrive, he founded AM Strategic Consultancy to help companies realise their full growth potential.
Adam Bent is licensed and regulated by the AAT under licence number 1005891.
Handling client money brings significant responsibilities for any law firm. While finance tasks can be delegated or outsourced, regulatory responsibility remains firmly with the practice.
So, what is a COFA, and what does the role involve?
A Compliance Officer for Finance and Administration (COFA) oversees a firm’s compliance with the SRA Accounts Rules. The role helps protect client money and supports effective financial controls across the practice.
What is a COFA responsible for?
A COFA has an important oversight role within an SRA-regulated law firm. The Solicitors Regulation Authority states that COFAs have responsibilities relating specifically to compliance with the SRA Accounts Rules.
Typical responsibilities include:
The COFA does not need to complete every finance task personally. However, effective oversight depends on having reliable processes, accurate information and clear reporting arrangements.
Does every law firm need a COFA?
SRA-authorised firms are required to operate with appropriate compliance officers, including a COFA for finance and administration. The individual nominated for the role must receive SRA approval before taking up the position.
Importantly, appointing a COFA does not transfer all responsibility for financial compliance to one person. The SRA Accounts Rules also place responsibilities on authorised bodies, their managers and employees.
Who can become a COFA?
A COFA should have sufficient seniority, responsibility and authority within the firm to carry out the role effectively.
Depending on the practice, this might be a: partner, director, owner, finance director, or senior manager.
The SRA considers whether proposed compliance officers have sufficient authority and the ability to report regulatory breaches without inappropriate restrictions.
Day-to-day bookkeeping and legal cashiering can still be handled by an internal finance team or outsourced provider. However, the firm must retain suitable oversight and controls.
COFA vs COLP: what is the difference?
Although the roles work closely together, their areas of responsibility differ.
A COFA focuses primarily on compliance with the SRA Accounts Rules, including client money and financial systems.
A Compliance Officer for Legal Practice (COLP) has wider responsibilities relating to the firm’s regulatory obligations and legal practice.
Together, the roles form an important part of a firm’s compliance and governance framework.
What financial controls should a COFA have in place?
Good COFA oversight depends on documented procedures rather than informal knowledge held by a small number of people.
Depending on the firm’s size and activities, we would expect clear procedures covering areas such as:
Under the SRA Accounts Rules, firms must maintain appropriate client accounting records and complete client account reconciliations at least every five weeks. Differences identified during reconciliations should be investigated and resolved promptly.
Common COFA and finance control mistakes
In our work with law firms, strong financial compliance usually comes from consistent processes rather than relying on a year-end review.
Common weaknesses can include:
Consequently, regular reviews can help a COFA identify weaknesses before they develop into larger compliance problems.
Building stronger financial compliance
A proactive COFA does far more than supervise bookkeeping. The role supports the protection of client money and helps ensure that a firm’s finance function operates within the SRA’s regulatory framework.
At AM Strategic, we support law firms with legal cashiering, three-way reconciliations, SRA Accounts Rules compliance, finance process reviews, management reporting and outsourced finance support.
If your COFA needs stronger financial controls, additional finance expertise or an outsourced legal finance function, book a consultation with AM Strategic to discuss how we can support your firm.
Frequently Asked Questions
1. Can a COFA also be a COLP?
Yes. The same individual may hold both positions where appropriate, provided they have the necessary authority, capability and SRA approval to perform both roles effectively.
2. Is the COFA personally responsible for every accounting mistake?
No. The role involves oversight of the firm’s compliance with the SRA Accounts Rules rather than personal responsibility for every administrative error. However, a COFA should ensure that issues are identified, investigated and addressed appropriately.
3. How often should a COFA review compliance with the SRA Accounts Rules?
Compliance should be monitored throughout the year. In particular, the SRA Accounts Rules require client account reconciliations at least every five weeks, with differences investigated and resolved promptly.
4. Does a COFA need to be a solicitor?
Not necessarily. The SRA’s approval process allows individuals who are not SRA-authorised to be nominated, although the proposed COFA must meet the relevant suitability and approval requirements.
5. Can a law firm outsource finance work if it has a COFA?
Yes. Firms can use internal teams or outsourced finance providers for day-to-day finance work. However, outsourcing does not remove the firm’s regulatory responsibilities, so the COFA still needs suitable oversight, controls and access to accurate financial information.
Adam Bent is a trusted financial leadership expert with 30 years of experience helping startups and small to medium-sized businesses achieve faster growth. He guides companies to success through strategic financial planning and implementation, using his expertise to build actionable turnaround plans for businesses in financial distress.
Having seen many entrepreneurs with great ideas struggle due to a lack of financial expertise, Adam specialises in translating vision into viable, practical financial models, offering dedicated support every step of the way.
Driven by the reward of seeing businesses thrive, he founded AM Strategic Consultancy to help companies realise their full growth potential.
Adam Bent is licensed and regulated by the AAT under licence number 1005891.