Jurisdiction(s):
United Kingdom

Key definition

Audit definition

What does Audit mean? In asset-based lending, an audit is the lender’s on-site or desktop review of the borrower’s collateral, records and controls to verify the quality and value of funded assets and the accuracy of borrowing-base reporting. It is distinct from a statutory audit of financial statements under the Companies Acts. “Audit” in this context is a descriptive term used in facility documents (also called a collateral audit, field examination or survey), not one defined by legislation or case law. Audits typically occur pre‑lend and periodically during the facility, or on triggers (e.g. covenant breach, rapid growth or acquisition). Scope usually covers receivables...

Law firm file audits and reviews: building a Lexcel-compliant process with selection criteria, frequency, corrective actions, supervisory oversight and COLP reporting (England and Wales)

Published by a LexisNexis Practice Compliance expert

Practice notes

No rule expressly obliges firms to operate a file Audit or review process. Nonetheless, practices holding, or seeking, Lexcel accreditation must maintain a file review system, and Professional indemnity insurers commonly enquire about such systems as an indicator of sound Risk management. While the SRA provides no guidance on how to carry out file audits or reviews, the Lexcel standard requires reviews to be regular, the procedure to be independent, and to assess either the management of the file, its substantive legal work, or both, and to include:

setting criteria for selecting files
specifying the number of reviews and how often they occur
keeping a record of each review on the matter file and centrally
ensuring any remedial action identified is completed within 28 days and verified by the reviewer
requiring the designated supervisor to review and monitor data generated by file reviews
carrying out at least an annual review of the data arising from file reviews

This Practice Note sets out how to develop and embed a successful file audit and review process within your law firm...

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Web page updated on 21/05/2026

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