Malpractice by company directors in relation to keeping and preserving company accounting records
Malpractice by company directors in relation to keeping and preserving company accounting records

The following Corporate Crime practice note provides comprehensive and up to date legal information covering:

  • Malpractice by company directors in relation to keeping and preserving company accounting records
  • Duty to keep accounting records
  • Failure to keep accounting records
  • Sentence for failure to keep accounting records
  • Failure to preserve accounting records
  • Sentence for failure to preserve accounting records

Duty to keep accounting records

Every company has a duty to keep adequate accounting records. The purpose of this duty is to ensure businesses record transactions to enable them to show the company’s financial position and to prepare accounts that comply with the Companies Act 2006 (CA 2006) and with relevant UK-adopted international accounting standards or in accordance with UK generally accepted accounting practice standards. See further, Practice Note: Accounting records—The duty to keep accounting records.

'Adequate' replaces 'proper' in the Companies Act 1985. Adequate means sufficient to:

  1. demonstrate and explain the company's transactions

  2. disclose reasonably accurately, at any time, the financial position of the company, and

  3. enable the directors to ensure that any accounts required to be prepared comply with the requirements of CA 2006

Company accounts are required by CA 2006 to contain:

  1. entries from day to day of all sums of money received and expended by the company and the reasons for receipts and expenditure, and

  2. a record of the assets and liabilities of the company

There is no statutory definition of accounting records and these may differ depending on the size and nature of the company. For a small business accounting records may be bank statements, purchase orders and sales and purchase invoices, while a large and complex company may have integrated records that it holds electronically, see further, Practice Note: Accounts and reports—fundamentals.

CA 2006 also

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