BOOKS OF A/Cs - LEGAL REQ. FOR COs.

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BOOKS OF ACCOUNTS - LEGAL REQUIREMENTS FOR COMPANIES

Auditor is required by sec.227 of the companies act,1956 to carry out investications
as will enable him to form an opinion as to whether proper accounting records have been
kept by the company.

The question of what accounting records need to be kept by a company is also dealt
within statute.

Section 209. Books of account to be kept by company

1[(1) Every company shall keep at its registered office proper books of account with respect to-


(a) all sums of money received and expended by the company and the matters
	in respect of which the receipt and expenditure take place;

(b) all sales and purchases of goods by the company;

(c) the assets and liabilities of the company; and

3[(d) in the case of a company pertaining to any class of companies engaged in production,
processing, manufacturing or mining activities, such particulars relating to utilisation of
material or labour or to other items of cost as may be prescribed, if such class of companies is
required by the Central Government to include such particulars in the books of account:]

Provided that all or any of the books of account aforesaid may be kept at such other place
in India as the Board of directors may decide and when the Board of
directors so decides, the company shall, within seven days of the decision,
file with the Registrar a notice in writing giving the full address of that other place.]

(2) Where a company has a branch office, whether in or outside India, the company shall be
deemed to have complied with the provisions of sub-section (1),
if proper books of account relating to the transactions effected at the branch office
are kept at that office and proper summarised returns, made up to dates
at intervals of not more than three months, are sent by the branch office to
the company at its registered office or the other place referred to in sub-section (1).

Note :

Sec.209 does not name the books of account that a company shall keep.

It may maintain whatever books it likes provided all the aforesaid transactions are
recorded therein.

As per sec.2(8) books and paper and book or paper include accounts, deeds,
vouchers,writings and documents.

So,

Proper books of accounts means

	books necessary to give a true and fair view of the state of affairs of the company
	and to explain its transaction.

	must be kept on accrual basis of accounting & according to double entry system
	of accounting.

As per sec.541(2)

The records must include as a minimum :

Cash book(cash/bank) containing entries on day to day basis

Purchase/Sales journals or some similar type of record supported by invoices.
	(i.e) Buyers and sellers are capable of being identified.
	(Detailed records are not required for goods sold by way of ordinary retail trade)


Year end stock summaries ( Prepared from stock records or physical counts)
together with statements of ant stocktakings on which those summaries are based.
	(Statement of stock counted on a cyclical basis during the year should be
	retained)

Nominal Ledger.

Note :

Sec.209 says Transactions

Sec.541(2) says Minimum Records

Proper books of account as required by law are those which contain a record of all
the transactions specified both in sec.209 and sec.541(2) in a manner that they present
a true and fair view of the state of affairs of the financial position and profitability of the company.

Replies (6)

Guest

In addition to the books of account,cost records u/s.209(1)(d),

Certain statutory registers and records to be kept and maintained by every company
under the provisions of the companies act,1956.

There are some other registers and records which although not required to be maintained
compulsorily but are necessary towards proper maintenance of the records and to ensure
efficient and effective internal control.

What ?

Statutory Books

Certain registers and records which are required to be maintained compulsorily by all
companies under the provisions of the companies act,1956.

Non-Statutory Books

Books which are not required to be kept under the law but the same are maintained for
the proper and efficient functioning of the company.

Statutory registers and records to be maintained by companies

Section		Descripttion of registers/Records

49(7)		Register of investments in
		shares or securities not held in company's Name

58A		Registers of deposits

77A(9)		Register of securities bought back

136		Copy of every instrument creating any charge
		requiring registration

143(1)		Register of charges

150(1)		Register of members

151(1)		Register of index of members

152(1)		Register of debentureholders

152(2)		Index of debentureholders

152A		Register and index of beneficial owners

157(1)		Foreign register of members and or
		debentureholders

158(4)		Duplicate of such Foreign register of members or
		debentureholders

163(1)		Copies of annual returns prepared u/s.159 & 160.

193(1)		Minutes books of General meetings &
		meeting og board of directors and
		committees of board

209(1)		Books of accounts and cost records

209(2)		Books of accounts relating to the transaction
		effected at the branch.

301(1)		Register of contracts,companies and firms
		in which directors of the company are interested

302(6)		Contracts for appointment of manager
		or managing director

303(1)		Register of directors, managing director, manager and
		secretary.

307(1)		Register of directors shareholding

372A(5)		Register of loans and investments made or guarantee
		given or security provided to any other body corporate.

CARO,2003		Register of Fixed assets

Rule 20
of companies
(Issue of
share certificate)
Rules,1960		Register of renewed and duplicate certificates

Regulation 71
of table A
od schedule I		Directors attendance register

		Members attendance register


Non-Statutory registers and records to be maintained by companies

1		Share Application and Allotment Register

2		Debenture Application and Allotment Register

3		Register of transfer of shares/other securities

4		Register of dividend

5		Dividend /interest mandate registers

6		Register of Share Warrants

7		Register of Proxies

8		Register of probates, Letters of Administration,
		Succession certificate etc.

9		Register of share certificate lost

10		Register of documents sealed

11		Register of interest on debentures

12		Register of Special instructions

13		Register of power of attorney/Nominees and
		other documents received by the company
		for registration

14		Agenda Register of board meetings

15		Agenda Register of general meetings

16		Register of resolution of which certified copies
		are given

17		Index of minutes of board and general meetings

18		Summary registers of balance sheets

19		Minutes books of class meeting/ creditors meeting

20		Register of inspection

Guest

Therefore,

At each stage of the audit, the standard of the clients accounting records should be
reviewed in the context of the statutory requirements.

The review should answer the following questions :

Do the records contain all the information which the law specifically requires ?

Are they sufficient to show and explain the company's transactions ?

Are they adequate to prepare accounts which show a true and fair view ?


Where it is considered that the company's accounting records are in any way deficient,

comments or recommendations on the above matter in the letter of comment to be
forwarded to the client.

it is important

Auditor has to differentiate

those items which are merely suggestions for the improvement of the company's
system and those which are changes required in order to bring the standard of
the company's accounting records up to the legal minimum.

In all cases where a qualification of auditors report might be considered necessary.
That is as per se.227.


Regards

K.Ilayaraja