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Requirements for Company Accounting

Tuesday, 10 July 2012

According to the Companies Act 2006 there is a general duty on companies to maintain adequate accounting records. In broad terms this means that companies must submit accounts to the registrar for filing at Companies House on an annual basis.

On a day to day level the obligations can be somewhat more detailed depending on the nature of the company and it is important that company managers and directors are aware of what is expected. Rollingsons recommends that specific advice from qualified professionals should always be sought regarding accounting matters.

Duty to Maintain Adequate Accounting Records

The statutory duty to maintain adequate accounting records means that failure to do so results in an offence being committed by every officer of the company who is in default. In setting out this duty an immediate question arises as to what constitutes ‘adequate’. The following matters should be taken into account:

  • Records of company transactions
  • Records showing the financial position of the company at a particular point in time
  • Records sufficient to prepare the statutory accounts
  • Day to day records of receipt and expenditure
  • Records of the assets and liabilities of the company
  • Statements of stock for trading/retailing companies
  • Statement of goods and services sold or purchased

Keeping Accounting Records

The accounting records must be maintained at a suitable place such as the company’s place of business or the company’s registered office and be available for inspection by the officers of the company.

The time period for maintaining records of the company’s accounts depends on whether it is private or public:

  • Private company – 3 years from the date on which they were produced
  • Public company – 6 years from the date on which they were produced

Failure to maintain records for the prescribed period results in an offence being committed by every officer that is in default.

Failure to Maintain Adequate Records

Where there has been a breach of any of the duties relating to the maintenance of adequate accounting records a person guilty under the provisions of the Companies Act (s389) is liable on conviction to imprisonment for a term not exceeding two years or a fine or both.

It is a defence for the person charged with such an offence to show he acted honestly and that in the circumstances in which the business was carried on the default was excusable.

If you need assistance regarding company accounts or other company and commercial matters Rollingsons has experienced lawyers who can assist you; for more information please contact James Crighton via e-mail or by telephone on 0207 611 4848.