The following Practice Management practice note produced in partnership with Robert Mowbray of Taylor Mowbray LLP provides comprehensive and up to date legal information covering:
This Practice Note provides information about how to read and understand the financial accounts of a law firm.
Law firms need to look at their accounts to see how they are performing and understand what needs to be done to improve performance.
What is available in a set of year-end accounts will depend upon the:
legal constitution of the firm
rules that govern the form and content of the accounts
In addition to year-end accounts, you may elect to produce monthly or quarterly management accounts which should be regularly reviewed. For further information on management accounts, see Practice Note: The importance of good time recording.
Every firm needs to prepare a set of annual financial statements that make up the firm’s financial accounts. There are six financial statements potentially available:
profit and loss account
cash flow statement
notes to the accounts
report to members
The accounts of law firms and sole practitioners can look different as the legal constitution of the firm may dictate certain rules governing their format.
No rules govern the format of these accounts.
If you are a traditional partnership, the partnership deed might have rules that govern the format of your financial statements. There are no other rules.
If you are trading
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