S.147 of the Companies Act requires every company to keep in the English language proper books of accounts 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 takes place. Hence, most companies will have a cash book to comply with this requirement but note that the Companies Act does not specifically call for a cash book nor does it lay down any hard rules on what form these records should take.
b) All sales and purchases of goods by the company: Most companies comply with this requirement by maintaining sales and purchases journals or day books. Again, the Companies Act does not specify the form which these records should take.
c) Assets and Liabilities: Most companies comply with this requirement by maintaining personal and general ledgers with regard to assets and liabilities of the company and changes therein.
The books of accounts generally speaking can be kept anywhere the directors deem fit and are open to inspection by the directors at any time. The Companies Act also requires that a company keeps the following statutory books.
1. A register of directors and secretaries
2. A register of charges, fixed and floating
3. Minute Book of meetings of the company, meeting of its directors
4. An indexed register of accounts
5. An indexed register of each director's shareholding
It also requires that public companies must keep a register of major shareholders, thus an interest of 5% or more in the nominal value of the voting share capital is a major holding.
Proper books of accounts are such books that are necessary to give a true and fair view of the state of affairs and to explain its transactions. The auditor’s interest in the statutory books is:
a) They are usually concerned with accounts;
b) They are audit evidence in their findings and details of items in the accounts;
c) Failure to maintain proper books of accounts casts doubt upon the accuracy and reliability of the books generally.
The Companies Act principles requires that where a company has branches, then returns must be received from those branches that can explain its transactions as for the main company.