Section 386 Companies Act 2006: What are adequate accounting records?

What does statute intend by the need to keep adequate accounting records, that are sufficient to show and explain the company’s transactions, such that they show with reasonable accuracy the company’s financial position?
Perhaps this is suitably well explained in R v Garvey [2001] EWCA Crim 1365 at [56] and [57]:
[56] The judge directed the jury in the following terms:
“The words ‘accounting records’, those two words, ‘accounting records’ are not defined in the Act and therefore the question is posed what accounting records must be kept? It is irrelevant that those words are not defined in the Act because explanation of them is given in a case, and as you will know from what I have told you, you probably know already, English Law depends not just on what Parliament has enacted but also on the decisions of the Court. This particular decision is nearly 120 years old and has stood the test of time. It applies now just as much as it applied when the words were first spoken and the words are clear now and I will give you them. So what is meant by accounting records? The judge said (Lord Esher MR in ex parte Reed and Bowen [1886] 17 QBD 244):
‘It is not enough that there should be books with entries in them which would require a prolonged examination by a skilled accountant in order to ascertain the result of them. That is not keeping proper books. The books shall be properly kept and balanced from time to time so that at any moment the real state of the traders affairs may at once appear.’
[57] That direction seems to us, albeit based upon authority of some antiquity, to set out fully and properly the relevant ingredients of the offence, and the nature of the defence. It accords with the relevant passage in Palmers Company Law at para F.476 para 4:
“The accounting records should comprise an orderly, classified collection of information capable of timely retrieval, containing details of the company’s transactions, assets and liabilities. An unorganised collection of vouchers and documents will not suffice: whatever the physical form of the records, the information should be so organised as to enable a trial balance to be constructed. If, for example the information is held on a computer data base as a subset of a wider information, the software should be capable of retrieving the appropriate data.”
[added emphasis]

The aforesaid is not legal advice and is not to be relied upon as such. No liability is accepted by the writer for any reliance placed on the same. 
If you have a specific query then you should seek independent legal advice on the same.

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