Are the directors required to maintain proper accounting records?

The directors and managers of every company are required to keep proper accounting records to sufficiently explain the transactions and financial position of the company. The records usually contain entries of all receipts and payments, details of sales and purchases of goods, record of the company’s assets and liabilities and a record of annual stocktaking if the company deals in goods. The directors must prepare a profit and loss accounts and balance sheet together with notes to the accounts giving a true and fair view of the state of affairs of the company at the end of the financial year.

The director’s report attached to the accounts must be approved by the board and signed by two directors. The accounting records must be kept at the company’s registered office or at such other place as the directors think fit. The Companies Act requires the accounting records to be kept for seven years.