Which records close a company's financial year?

Bank statements, sales invoices, purchase invoices and receipts, payroll and CPF records, and the papers for loans, leases and assets. Together they show what came in, what went out, what the company owes and what it holds. Each is easier to collect as it arrives than to rebuild after the year has closed.

The list below is practical guidance on what a year-end close draws on. It is not a list set by IRAS or by the Companies Act.

Records that explain. Section 199(1) of the Companies Act 1967 requires records that 'will sufficiently explain the transactions and financial position of the company'. The test is explanation, not volume. A box of receipts is not the same as records that show what happened and where the company stands.

At least five years, on two counts. Section 199(2) requires records kept for not less than 5 years from the end of the financial year in which the transactions they relate to are completed. IRAS expects source documents, accounting records and bank statements kept for at least 5 years from the relevant Year of Assessment.

The two periods run from different starting points: one from the end of a financial year, the other from a Year of Assessment. Keep each record until both have run.

Because the close works from them. A record filed when it arrives is complete and still easy to explain. A record chased after the year has ended may be missing, and a missing record leaves a gap in what the accounts can explain, which is the standard section 199 sets.

Start a year-end folder this week and file each record as it arrives. Bank statements go in when they are issued, invoices when they are sent or received, and payroll and CPF records when each month is run. At year end the folder is already complete, and the close starts from it.