Books of Accounts and Audit

Section 147 of the companies Act Cap 486 states:
(1) Every company shall cause to be kept in the English language proper books of account with respect to–

  •  All sums of money received and expended the company and the matters in respect of which the receipt and expenditure takes place;
  • All sales and purchases of goods the company;
  • The assets and liabilities of the company: Provided that in respect of an existing company the requirement that such books of account shall be kept in the English language shall not have effect until after the expiration of a period of two years from the date of the commencement of this Act.

(2) For the purposes of this section, proper books of account shall be deemed not to have been kept with respect to the matters aforesaid if there are not kept such books as are necessary to give a true and fair view of the state of the company’s affairs and to explain its transactions.
(3)

  • The books of account shall be kept at the registered office of the company or, subject to the provisions of paragraph (b), at such other place as the directors think fit, and shall at all times be open to inspection the directors.
  • The books of account shall only be kept at a place outside Kenya with the consent of the registrar and subject to such conditions as he may impose; and if the books of account are kept at a place outside Kenya there shall be sent to, and kept at a place in, Kenya, and be at all times open to inspection the directors, such accounts and returns with respect to the business dealt with in the books of account so kept as will disclose with reasonable accuracy the financial position of that business at intervals not exceeding six months.

(4) If any person being a director of a company fails to take all reasonable steps to secure compliance the company with the requirements of this section, or has his own wilful act been the cause of any default the company thereunder, he shall, in respect of each offence, be liable to imprisonment for a term not exceeding twelve months or to a fine not exceeding ten thousand shillings or to both:
Provided that–
(1) in any proceedings against a person in respect of an offence under this section consisting of a failure to take reasonable steps to secure compliance the company with the requirements of this section, it shall be a defence to prove that he had reasonable ground to believe and did believe that a competent
and reliable person was charged with the duty of seeing that those requirements were complied with and was in a position to discharge that duty; and
(2) A person shall not be sentenced to imprisonment for such an offence unless, in the opinion of the court, the offence was committed willfully.
In conclusion Section 147 of the companies Act Cap 486 states clearly the following:

  • The company should keep proper books of account in English language. The books should be expressed in monetary terms
  • The books should reflect a true and fair view of the transactions under during the period in question
  • The books should be kept in the registered office of the company and any other place that the directors may deem fit
  •  If the books are kept outside Kenya, the registrar must be informed
  •  If the directors or any other officer fails to keep the books of accounts the director or any officer shall be liable a fine of not exceeding ten thousands or a jail term not exceeding twelve months or both
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