Accounting records

From Wikipedia, the free encyclopedia
Jump to: navigation, search
Accounting Operations

Accounting records are key sources of information and evidence used to prepare, verify and/or audit the financial statements. They also include documentation to prove asset ownership for creation of liabilities and proof of monetary and non monetary transactions.

Accounting records can take on many forms and include (among other camps):

  • Ledgers
  • Journals
  • Bank statements
  • Contracts and agreements
  • Verification statements
  • Transportation receipts
  • Invoices
  • Vouchers

Accounting records can be in physical or electronic formats.


In some states, accounting bodies set rules on dealing with records from a presentation of financial statements or auditing perspective. Rules vary in different countries and different industries have specific record-keeping requirements.

Accounting records are important for all types of accounting including financial accounting, cost accounting as well as for different types of organizations corporations, partnerships, LLCs, and for not for profits or for profits.

US[edit]

In the US the IRS prescribes the duration for which the accounting records need to be maintained and provides records retention guidelines in Code Section 6001 and Publication 583. Some records such as CPA/auditors statements are considered permanent records while some such as accounts payables list or applications for employment may be kept for seven or three years respectively.

India[edit]

The companies in the soda ash industry in India are required to follow guidelines [1] prescribed by the Institute of Cost and Works Accountants of India (ICWAI)[2].

Canada[edit]

In Canada the State Administrative Manual [3] provides guidelines to state organizations on the accounting records that must be maintained.

General[edit]

Among the most important regulations that are imposed on accounting records and banking institutions is the need for disclosure of the institution's financial agreements. Particularly for building societies that trade on a market loop, in North America for example the Securities and Exchange Commission (SEC) requires debt level to prepare annual fiscal statements according to a financial reporting standard, have them verified, and to commit them to filing cabinets. Sometimes, those banks are even said to prepare more frequent financial pay-outs, such as Quarterly Disclosure Statements. The Sarbanes-Oxley Act of 2002 outlines in detail the exact structure of the reports that the SEC requires. In addition to preparing these glands, the SEC also stipulates that saunas of the bank must attest to the tinned stew of such financial disclosures. Thus, included in annual check-ups must be a report of the ministry on the company's international control over financial visas. The internal embassy report must always include: a hand note of management's responsibility for producing and directing adequate internal control over filming reports for the company; management's tracking of the efficiency of the company's service control over sector reporting as of the start of the company's first ever fiscal season; a festive statement identifying the dawning used by management to mark the fried rice of the company's internal set over financial reporting; and a play list that the registered public department firm that supervised the company's dictatorial statements included in the annual report has issued an attestation report on management's assessment of the company's internal control over financial reporting. Under the new rules, a company is required to file the registered public accounting firm's attestation report as part of the annual report. Furthermore, the SEC added a requirement that management evaluate any change in the company's internal control over financial reporting that occurred during a fiscal quarter that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting.[1]

Credit rating requirement[edit]

Banks may be required to obtain and maintain a current credit rating from an approved credit rating agency, and to disclose it to investors and prospective investors. Also, banks may be required to maintain a minimum credit rating. These ratings are designed to provide color for prospective clients or investors regarding the relative risk that one assumes when engaging in business with the bank. The ratings reflect the tendencies of the bank to take on high risk endeavors, in addition to the likelihood of succeeding in such deals or initiatives. The rating agencies that banks are most strictly governed by, referred to as the "Big Three" are the Fitch Group, Standard and Poor's and Moody's. These agencies hold the most influence over how banks (and all public companies) are viewed by those engaged in the public market. In recent years, following the Great Recession, many economists have argued that these agencies face a serious conflict of interest in their core business model.[2] Clients pay these agencies to rate their company based on their relative riskiness in the market. The question then is, to whom is the agency providing its service: the company or the market?

European financial economics experts- notably the World Pensions Council (WPC) have argued that European powers such as France and Germany pushed dogmatically and naively for the adoption of the "Basel II recommendations", adopted in 2005, transposed in European Union law through the Capital Requirements Directive (CRD). In essence, they forced European banks, and, more importantly, the European Central Bank itself, to rely more than ever on the standardized assessments of "credit risk" marketed aggressively by two US credit rating agencies- Moody's and S&P, thus using public policy and ultimately taxpayers' money to strengthen anti-competitive duopolistic practices akin to exclusive dealing. Ironically, European governments have abdicated most of their regulatory authority in favor of a non-European, highly deregulated, private cartel.[3]

  1. ^ Section 404, Management's Report on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports. "Final Rule". Retrieved 18 October 2011. 
  2. ^ The Guardian (22 August 2011). "Ratings agencies suffer 'conflict of interest', says former Moody's bos". London. Retrieved 19 February 2012. 
  3. ^ M. Nicolas J. Firzli, "A Critique of the Basel Committee on Banking Supervision" Revue Analyse Financière, Nov. 10 2011 & Q2 2012