Accounts and Bookkeeping

Accounts and bookkeeping is one aspect of businesses that so many people dread. Many people do not understand the importance of accounts and think that they must keep books because the government requires them to. Indeed, in Malaysia, it is a government requirement that books are kept but more importantly, the financial information captured in the accounts is essential for decision-making purposes.

Why keep records?

Good records help directors of a business understand the business such as which products are selling the best, which items cost the business the most, what products are most profitable. Without accurate financial information it is hard to know exactly how the business is doing. Decisions such as, should the company purchase a new equipment to increase the manufacturing capacity of the company or should a new marketing campaign be launched to improve sales should be considered after reviewing the financial information available.

Who is responsible for producing accounts?

Under the Companies Act (Malaysia) the directors and managers of every company are responsible to ensure that accounting and other relevant records relating to the transactions and financial position of the company are properly kept. The books of accounts must give a true and fair view of the state of affairs of the company and the accounting entries must be made to the books of the company within 60 days of the completion of the transaction.

Any director of the company who fails to take all reasonable steps to ensure compliance of the company with the above requirements will be liable upon conviction to an imprisonment for a term of 3 years or RM10,000.

When must accounts be presented?

The directors are required to present an audited set of accounts at the annual general meeting once in every calendar year. The audited set of accounts is to be made up to a date not later than 6 months from the date of the meeting.

How long must we retain the accounting records for?

According to the Companies Act (Malaysia), every company and its directors and managers must keep sufficient accounting and other records to explain transactions, and the financial position for 7 years after the completion of the transactions or operations.

Getting help from an accountant?

For directors who are already so tied up with the operational aspects of the business, they would need the help of bookkeepers to enter the transactions into the accounts and accountants to help them interpret the data captured in the accounts.

Lets start with accountants. Accounting services may vary from hiring a full-time accountant or to meet with an outside accountant once a year to discuss accounts prior to audit and submission for tax. The amount a company use an accountant would depend on the size of the business and the extent of the directors' accounting knowledge.

For larger companies, accountants are mostly employed on a full-time basis. Their roles may include:

• To oversee accounts that is updated by the bookkeeper
• To prepare budgets and forecasts for the company
• To assist directors on by giving proper advise
• To oversee the financial and cash position of the company
• To plan and implement systems and controls for the company
• To give advises on tax issues

Salaries of accountants in Malaysia: may range from RM4,000-RM7,000 per month (depending on the level of experience)

Smaller companies may choose to either employ a full-time bookkeeper or to hire a part time bookkeeper to enter the transactions of the company into accounting software. Some accounting firms in Malaysia also provide bookkeeping services to their customers.

Salaries of bookkeepers in Malaysia : may range from RM2,000-3,000 per month.