First let us first understand what books of accounts are? Books of accounts are defined as the books, papers, vouchers, minutes and registers that are maintained either in physical form or electronic form according to the transactions of the company. According to Companies Act 2013 it is mandatory for every type of company private limited company, the public company, one person company etc to maintain proper books of accounts. Below we have stated certain provisions regarding the maintenance of books of accounts of the company-
1. The books of accounts shall be prepared on the accrual basis and the double entry system shall be followed.
2. In the books of accounts, the assets and liabilities of company, sales, purchase, receipts, and expenditure shall be stated accurately.
3. The books of accounts can be either maintained in electronic form or in Physical form.
4. The books of accounts prepared must give the true and fair view of the state of affairs of the company.
5. The books of accounts prepared must give the explanation of the transaction effected at the companies registered office and the branches.
6. The books of accounts prepared by the company must relate to any specific year only.
7. The companies which are involved in the manufacturing, production or processing activity must prepare the accounts according to the utilization of labor, material and other things of cost.
8. The books of accounts prepared by the company shall be kept at the registered office of the company. Further, in case the company is maintaining its books of accounts at some place other than the registered office of the company it must be intimated to the registrar within 7 days.
9. In case the company has any branches outside India the branches are also required to prepare the accounts in the manner specified above for the transaction effected at the branch office. Further, the branch offices must send the summarized form of the accounts prepared to the company at its registered address or at the place decided by the board of directors.
10. Following officers of the company will be responsible to take all reasonable steps to secure compliance by the company with the requirement of maintenance of books of accounts etc-
- Whole-Time Director, in charge of finance
- Chief Financial Officer
- Any other person of a company charged by the Board with the duty of complying with provisions of section 128.
Penalty for Contravention
In case the above-mentioned persons fail to comply with the provisions of this section they shall, be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees or both.