Risk-based approach
Although ICAEW’s Clients’ Money Regulations require client accounts to be reconciled every five weeks, some insolvency cases, particularly the small numbers of trading cases, may necessitate more frequent, and potentially even daily reconciliations in the early stages. At the other end of the spectrum, those cases with only one remaining issue to be resolved may need far less frequent reconciliations. In those cases, potentially quarterly, or at the extreme six-monthly reconciliations could be appropriate. The timing should always reflect the balance being held.
We’d expect consideration of the frequency of reconciliation to be documented, particularly where reconciliations are being pushed out to extended periods. And we’d recommend that estate accounts are always reconciled before progress reports are issued.
There is an overriding and key obligation on IPs to ensure that estate funds are protected and that there are adequate cashiering controls in place to comply with that obligation. The review of bank reconciliations plays an important part of these controls, as referenced in SIP 11, paragraph 9(g).
IPs should also ensure that where significant sums are being held, consideration is given to placing funds on interest-bearing accounts. Having had so many years of low or negligible interest rates, we’re now in a position that IPs should ensure that funds are invested where appropriate.
