(b) Accounting records
Section 386 CA 2006 requires every company to keep accounting records and sets out what those records should be designed to achieve. They must be sufficient to
– show and explain the company’s transactions, disclosing with reasonable accuracy, at any time, the financial position of the company at intervals of not more than six months;
– enable the directors to ensure that any accounts required to be prepared comply with the CA and International Accounting standards.
In particular the accounting records must contain:
– entries from day-to-day of all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place;
– a record of the assets and liabilities of the company; and where the company deals in goods;
– statements of stock held by the company and the end of each financial year of the company;
– all statements of stocktaking from which any statement as is mentioned above has been prepared; and
– except in the case of goods sold by way of ordinary retail trade, statements of all goods sold and purchased showing the goods and the buyers and sellers in sufficient detail to enable them to be identified. Under CA s.394 a company’s directors must prepare accounts for each accounting reference period, usually 12 months.
These accounts must include a balance sheet and a profit and loss account (s.396) and must show a true and fair view of the company’s state of affairs.
Accounting records must be kept for a period of three years for private companies and six years for public companies. |
