General Provisions to Contents and Form of Financial Statements

Section 149 of the companies Act Cap 486 states that:

(1) Every balance sheet of a company shall give a true and fair view of the state of affairs of the company as at the end of its financial year, and every profit and loss account of a company shall give a true and fair view of the profit or loss of the company for the financial year.
(2) A company’s balance sheet and profit and loss account shall comply with the requirements of the Sixth Schedule, so far as applicable thereto.
(3) Save as expressly provided in the following provisions of this section or in Part III of the Sixth Schedule, the requirements of subsection (2) and the said Schedule shall be without prejudice either to the general requirements of subsection (1) or to any other requirements of this Act.
(4) The registrar may, on the application or with the consent of a company’s directors, modify in relation to that company any of the requirements of this Act as to the matters to be stated in a company’s balance sheet or profit and loss account (except the requirements of subsection (1)) for the purpose of adapting them to the circumstances of the company.
(5) Subsections (1) and (2) shall not apply to a company’s profit and loss account if–

  • the company has subsidiaries; and
  • the profit and loss account is framed as a consolidated profit and loss account dealing with all or any of the company’s subsidiaries as well as the company and-
  •  complies with the requirements of this Act relating to consolidated profit and loss accounts; and
  •  shows how much the consolidated profit or loss for the financial year is dealt with in the accounts of the company.

(6) If any person being a director of a company fails to take all reasonable steps to secure compliance as respects any accounts laid before the company in general meeting with the provisions of this section and with the other requirements of this Act as to the matters to be stated in accounts, 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–

  •  in any proceedings against a person in respect of an offence under 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 the said provisions or the said other requirements, as the case may be, were complied with and was in a position to discharge that duty; and
  •  a person shall not be sentenced to imprisonment for any such offence unless, in the opinion of the court, the offence was committed wilfully.

(7) For the purposes of this section and the following provisions of this Act, except where the context otherwise requires –

  •  any reference to a balance sheet or profit and loss account shall include any notes thereon or document annexed thereto giving information which is required this Act and is thereallowed to be so given; and
  • any reference to a profit and loss account shall be taken, in the case of a company not trading for profit, as referring to its income and expenditure account, and references to profit or to loss and, if the company has subsidiaries, references to a consolidated profit and loss account shall be construed accordingly.

In general Section 149 of the companies Act Cap 486 states clearly the following

  • Statement of financial position should give true and fair view of the state of affairs of the business at the end of the accounting period
  •  A company’s statement of financial position and the income statement should comply with the requirements of the Sixth Schedule of the companies Act Cap 486.
  • Any person, officer or director who fails to comply with the requirements of the companies’ Act Cap 486 is liable to a jail term of twelve months or ten thousands or both
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