Chapter 11 Accounts and Annual Returns Flashcards
What does “Books and Paper” include?
Books of accounts, cost accounting records, deeds, vouchers, writings, documents, minutes, and registers (whether paper or electronic).
What does “Books of Accounts” include?
Records of:
1. All sums of money received and expended.
2. All sales and purchases of goods and services.
3. All assets and liabilities.
4. Items of cost for production, processing, manufacturing, or mining.
What is the “Financial Year” of a company?
The period for which a company prepares financial statements, whether it is a full year or not.
Where must a company keep its books of accounts?
- At the registered office.
- At another place approved by the Board (must notify the Registrar within 7 days).
How long must a company retain books of accounts?
10 years for public companies.
5 years for private companies.
What additional records must be kept by a manufacturing company?
Cost records related to materials, labor, and overheads.
What are the requirements for a branch office?
- A company must maintain proper books of accounts at the branch office.
- Summarized returns must be sent periodically to the registered office.
Who is allowed to inspect books of accounts?
- Directors can inspect at any time.
- Members have no automatic right unless authorized by the Act, directors, or a general meeting.
What are the penalties for not maintaining proper books of accounts?
Fine and liability for responsible officers.
Who prepares financial statements?
The Board of Directors.
What must financial statements present?
A true and fair view of the company’s financial position.
What are the components of financial statements?
- Statement of Financial Position (Balance Sheet).
- Statement of Profit or Loss and Other Comprehensive Income.
- Statement of Changes in Equity.
Statement of Cash Flows. - Notes to the Financial Statements.
- Comparative information of the previous period.
Who signs financial statements?
The CEO and at least one director.
For listed companies, the CFO must also sign.
What is the deadline for preparing financial statements?
Within 4 months after the close of the financial year.
When must financial statements be filed?
Listed Companies: Within 30 days after the AGM.
Other Companies: Within 15 days after Board approval.
Where should listed companies file financial statements?
- With SECP, Registrar, and Stock Exchange.
- Must also be uploaded on the company’s website.
Which companies are required to prepare a Directors’ Report?
- Public companies.
- Private companies that are subsidiaries of a public company.
- Private companies with paid-up capital exceeding Rs. 3 million.
What must the Directors’ Report include?
- State of affairs of the company.
- Dividend details (if any).
- Transfers to reserves (if any).
What additional details are required in the Directors’ Report for public companies?
- Names of directors.
- Principal activities and risks.
- Material changes affecting business.
- Major subsequent events.
- Explanation of modified audit opinion (if any).
- Pattern of shareholding.
- Holding company details.
- Earnings per share and reasons for loss (if applicable).
- Defaults in payment of debts (if any).
- Comments on internal control adequacy.
What additional details in director’s report are required for listed companies?
- Trends and factors likely to affect business.
- Environmental impact.
- Corporate social responsibility activities.
- Adequacy of internal financial controls.
Which companies must file an annual return?
All companies except SMCs and private companies with paid-up capital below Rs. 3 million.
What is the filing deadline for annual returns?
30 days from the date of the AGM.
