The Importance of Maintaining Proper Accounting Records
Directors need to ensure that at all times they maintain proper accounting records for their companies if they are to avoid being at risk of directors disqualification. This includes keeping a proper record of all significant transactions your company enters into.
Earlier this month, Robert Scappaticci, director of Gerards Ice Cream Co Ltd was banned from acting as a director for six and a half years for his failure to maintain proper accounting records.
In early September 2014, one of the company’s assets, a chip shop, had been transferred to a third party but due to major shortcomings in the company’s accounting practices, the transaction was not properly recorded.
As a result it was not possible to check the terms of the sale or to establish whether the shop was a company asset. This problem came to light when in September 2014 the company went into voluntary liquidation and the books were scrutinised by the liquidator. The lack of accounting records was sufficient to render Mr Scappaticci culpable for disqualification.
Andrew Garland, Partner in the Business Recovery Team at The Wilkes Partnership observes that directors will be at risk if significant transactions are not properly recorded and accounted for in the books and records of the company.
Directors leave themselves open to the risk of being disqualified as a director by The Insolvency Service who are rigorously pursuing directors. Directors must therefore ensure that they attain minimum standards in their record keeping and be ready to demonstrate that creditors are not at risk of losing out.’
If you are a director of a company and want advice in an insolvency situation then contact the Director Defence Team via telephone on 0121 710 5818 or email at [email protected] or visit www.directordefence.com