Each and every country has a different set of laws governing the operational and accounting requirements of the companies that call it home. These laws are often documented with unfamiliar legal jargon or complicated language.
For all of Kenya’s business operators, however, failure to understand the laws that govern companies is not an option.
Fortunately, we, at the Filing Room Kenya, understand our country’s accounting laws very well and we’ve created this document in order to help all of this country’s businesspeople. If, however, you want to do follow our research to its source, you can access the document here.
It is a survey of global accounting regulations conducted by ARMA, the world’s leading Information Management organisation, and is backed by their world-renowned reputation.
The retention of records (also called ‘documents’)
The difference between a record and a document is very minor and often only deemed important to the industry professionals who handle both daily. However, if you would like to know what differentiates a document from a record, you can do so here.
Keeping your records is incredibly important for a number of reasons. The day-to-day recording of your business’ interactions can act as a story of the project you’ve embarked on. Those records are often useful in assessing company philosophy or for interested parties that want to document the growth of their business. Accurate records can also help your business if it ever finds it necessary to prove a certain something has happened.
What some potential entrepreneurs do not know is that it is actually also a legal requirement that you keep your company’s records. Records are not just valuable to company directors. The Kenyan government considers them an essential asset in the well-running of the state.
Records help the government shape national corporation policy. They ensure that courts are capable of solving business disputes. And they also ensure that the government understands what factors are influencing certain areas of industry.
What is the law in Kenya?
According to Kenyan accounting law, every company must be constantly employed in the creation of proper accounting records that show and explain the company’s financial position for the most recent 3-month period.
These records must contain, though are not limited to, an assessment of day-to-day receipts and expenses as well as the documentation of assets and liabilities, inventory records as well as a statement of all goods bought and sold.
Once these records are created, they must be kept for a minimum of 7 years. This is the really important part. The government insists that all corporations keep and effectively manage their records for a seven-year period in order that Kenya’s enterprising businesses can always remain transparent.
That is the legal minimum requirement for how long your records should be kept. However, it is generally considered pertinent, amongst all elements of the business world, to keep them for much longer than that.
In cases where the Kenyan Revenue Authority suspects fraud, or if a Human Resources complaint is made, company directors may be asked for records going back as far as the company’s conception.
It falls to the company’s directors to prove their own innocence and having the correct records, effectively and appropriately managed, may prove to be a business-saving decision.
What format must these records be kept in?
The Kenyan government ensures that these records are kept for 7 years. However, depending on the document being kept, this can be in either physical (usually paper) or electronic form.
Legally, digital documents (emails and e-documents, for example) are considered an appropriate form of accounting record if they were generated, sent or received in that format, if the origin, destination and date can be surmised by that document and also that the digital format accurately represents the information found therein.
At first read, that might seem complicated. So, lets simplify it. Digital records can be kept digital if they were so when they were created, if there is a time stamp on them and so long as they are accurate.