Should directors of a company maintain proper accounting records?

The directors of a company must keep proper accounting records at all times. These accounting records must explain the financial position of the company correctly.

The records must contain all the transactions of the company and other financially important statistics, like:

• Entries of all payments and expenditures
• Records of the company’s assets
• Records of liabilities of the company
• Sales and purchase of goods

A director must present the company’s financial statements at the Annual General Meeting under Sections 201(2) and 201(5) of the Companies Act. These records must be able to:

• Ensure that all the financial statements are complying with the company’s accepted accounting practice
• Provide financial statements that can be promptly and adequately audited

A director has to prepare a balance sheet and a profit and loss account that provides a clear and correct view of the state of affairs of the company at the Financial Year End.

A director’s report that is attached to the accounts is signed by two directors and has to be approved by the board.