Duty of company keeping accounting records.

Accounting records

Section 628. (Companies Act Cap 486)

(1) Every company shall keep proper accounting records.

(2) For purposes of subsection (1), accounting records are proper only if they-

1. show and explain the transactions of the company;
2. disclose with reasonable accuracy, up to the end of the previous three-month trading period, the financial position of the company at that time; and
3. enable the directors to ensure that every financial statement required to be prepared complies with the requirements of this Act

3) In particular, a company shall ensure that its accounting records—

(a) contain-

(i) entries from day to day of all amounts of money received and spent by the company and the matters in respect of which the receipt and expenditure take place; and

(ii) a record of the assets and liabilities of the company; and

(b) comply with the prescribed financial accounting standards.

(4) If the business of the company involves dealing in goods, the company shall ensure that its accounting records contain-

(a) statements of stock held by the company at the end of each financial year of the company;

(b) all statements of stock takings from which any statement of stock as is referred to in

paragraph (a) has been or is to be prepared; and

(c) except in the case of goods sold in the ordinary course of ordinary retail trade-statements

of all goods sold and purchased, showing the goods and the buyers and sellers in sufficient

detail to enable them to be identified

(5) A parent company that has a subsidiary

undertaking in relation to which the above requirements do not apply shall take reasonable steps to ensure that the undertaking keeps such accounting records as will enable the directors of the parent company to ensure that every financial statement required to be prepared under this Part complies with the requirements of this Act

Source

COMPANIES ACT CAP. 486

• Published in Kenya Gazette Vol. CXVII—No. 101 on 18 September 2015
• Assented to on 11 September 2015

Financial Statements Reporting Period

Companies Act, 2015.

Extended Financial Statements (18 months) under Kenyan Law

Under the Companies Act, 2015 (No. 17 of 2015):

• Section 683 requires companies to prepare financial statements for each financial year.
• Section 684(2) clarifies that a company’s financial year may be longer or shorter than 12 months, particularly:
  • In the first financial year after incorporation.
  • When a company changes its financial year end.

This means a company can validly prepare and submit financial statements covering up to 18 months, provided the board has formally approved the change and the extended period is disclosed in the notes to the accounts.

During the audit of such Financial Statements the Auditors will or must apply the International Standards on Auditing (ISAs) to these financial statements and issue an opinion, regardless of whether the reporting period is 12 months or extended.

Source:  COMPANIES ACT CAP. 486