Financial records

Directors must keep proper corporation accounts and records that:

• correctly record and explain the corporation's transactions (including any transactions as a trustee) 
• explain the corporation’s financial position and performance.

Types of financial records

Your corporation will keep certain financial records depending on its size and what it does.

Ask your accountant or auditor about: 

• the records your corporation needs to keep 
• any problems or records you don’t understand.

Some financial records a corporation would keep include:

• income and expenditure information that records all the corporation’s transactions
• cash records, like bank statements, deposit books, cheque butts and petty cash records
• creditor and purchases records, such as purchase orders, invoices and statements received and paid, unpaid invoices, a list of all purchases, and a list of all creditors and their balances
• wages and superannuation records
• a register of property, plant and equipment showing transactions and balances for individual items
• inventory records
• tax returns and calculations, such as income tax, group tax, fringe benefits tax and GST returns and statements
• deeds, contracts and agreements.

Any financial record can be audited, so keep them correct and up to date.

Uses for financial records

Even the smallest corporation must have financial records so that the corporation, or its accountant, can prepare accurate financial statements.

They help the corporation with legal responsibilities for tax and superannuation.

Good financial records will tell directors:

• how much income the corporation is getting how much to expect in the future
• how much the corporation owes
• how much the corporation has spent
• if the corporation has a profit or a loss
• if the corporation can afford to pay its bills.

This helps directors meet their obligations of knowing the corporation’s financial standing.