Records Your Pty Ltd Should Keep

 

© Australian Securities & Investments Commission.

Reproduced with permission. ASIC Information sheet 76 (INFO 76).

 

 

 

In order to provide guidance to directors of small proprietary companies in answering this question, ASIC has reviewed the requirements of the Corporations Act 2001 (the Act) and has sought input from a number of professional bodies and associations to compile a schedule of appropriate books and records. If you are in doubt about the form and content of financial statements or other records which should be prepared or maintained you should seek professional advice.

The Act in section 286(1) states that a company must keep written financial records that:

  • correctly record and explain its transactions and financial position and performance; and
  • would enable true and fair financial statements to be prepared and audited.

 

Financial records are defined in section 9 of the Act as including:

  • invoices, receipts orders for the payment of money, bills of exchange, cheques, promissory notes and vouchers; and
  • documents of prime entry; and
  • working papers and other documents needed to explain:
    • the methods by which financial statements are made up; and
    • adjustments to be made in preparing financial statements.

 

Financial records may be kept electronically and there are numerous accounting software packages available for this purpose. Section 288 of the Act states that if financial records are kept in electronic form, they must be convertible into hard copy. Hard copy must be made available within a reasonable time to a person who is entitled to inspect the records. If financial records are kept on a computer which is owned and operated by a third party eg. your company’s accountant, you still have the responsibility to provide a hard copy.

Schedule of suggested books and records to be kept

Here are some of the basic financial records that accountants might expect a company to keep:

1. Financial Statements

  • Profit & Loss accounts (see Note 1)
  • Balance Sheets
  • Depreciation Schedules
  • Taxation Returns eg. income tax, group tax, superannuation, fringe benefits tax, business activity statements and all supporting documents.
2. General Ledger
3. General Journal
4. Asset Register
5. Computer Back-up Discs
  • Frequency – suggest at least monthly
6. Cash Records
  • Cash Receipts Journal
  • Bank Deposit Books
  • Cash Payments Journal
  • Cheque Butts
  • Petty Cash Books
7. Bank Account Statements, Bank Reconciliations and Bank Loan Documents
8. Sales/Debtor Records
  • Sales Journal
  • Debtors Ledger
  • List of Debtors
  • Invoices & Statements issued
  • Delivery Dockets
9. Work in Progress Records
10. Job/Customer Files
11. Stock Listings
12. Creditors Records
  • Invoices & Statements Received & Paid
  • Creditors Ledger
  • Unpaid Invoices
13. All Correspondence, Annual Returns and ASIC forms
14. Wages Records and Superannuation Records
15. Registers (where applicable – Refer Note 2)
  • Members
  • Options
  • Debenture Holders
  • Prescribed Interests
  • Charges
  • Unclaimed Property
16. Minutes of Meetings of Directors and/or Members
17. Deeds (where applicable)
  • Trust
  • Debentures
  • Contracts & Agreements eg. HP and leases.
  • Inter-company transactions, including guarantees.

 

Notes

1. Although the Act does not require small proprietary companies to prepare financial statements, unless requested by ASIC or shareholders, they are considered a valuable tool for managing your company and checking its progress and financial position and may be helpful if you are contemplating raising finance.

2. The above schedule is by no means exhaustive and the financial records required will vary from company to company. Further, the schedule does not cover the registers you must keep if your company holds a securities or futures licence.

3. Section 286(2) of the Act requires financial records to be kept for seven years.

This is Information Sheet 76 (INFO 76). Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.

This information is for guidance only and is not intended as specific advice to any reader. Professional advice should be obtained before acting on any information contained herein. The publisher accepts no responsibility for loss occasioned to any person or organisation as a result of action or the refrain of action as a consequence of the contents of this publication.