What Are Accounting Records?
Accounting records are all of the documentation and books involved in the preparation of financial statements or records relevant to audits and financial reviews. Accounting records include records of assets and liabilities, monetary transactions, ledgers, journals and any supporting documents such as checks and invoices.
Accounting Records Explained
Rules and laws are generally in place to force accounting entities and accounting firms to retain accounting records for a specified period of time. In the U.S., the SEC requires that accounting firms retain records from audits and reviews for at least seven years and that they retain any records that support or cast doubt on the conclusions of an audit.
There is no universal agreement as to which collection of business documents comprises a comprehensive set of accounting records. Accounting records can be thought of as a catch-all term. Different parties, such as creditors, equity investors or groups interested in corporate governance will have different, and often competing priorities; their demands or preferences for documentation will continuously change.
At different points in the economic or business cycle, parties demanding accounting records will alter their request for information based on the position in a cycle. For instance, at the start of an upswing in a business cycle, request for financial statements might be strong, as equity investors are bullish. In contrast, during a dip in a business cycle, creditors might require more details surrounding balance sheets items, as they become more hesitant to extend credit.
In short, accounting records and even methods of accounting are continuously evolving to keep pace with the changing nature of business and the information demands of interested market participants.