Introductions and definitions

March 2011

Ch 66: Computerised accounting records  

Part 1 Introduction to computerised accounting records and definitions used in connection with their storage and recovery

66.1 Index to this chapter

This chapter is divided into 5 parts as follows:-

Part 1 - Introduction to computerised accounting records and definitions used in connection with their storage and recovery (paragraphs 66.1 to 66.10).
Part 2 - Action to be taken when computerised records are discovered (paragraphs 66.11 to 66.32).
Part 3 - Making a record of the computer system and its contents (paragraphs 66.33 to 66.37).
Part 4 - Storage and protection of computerised media and accessing imaged copies (paragraphs 66.38 to 66.45).
Part 5 - Use in evidence (paragraphs 66.46 to 66.48).
Part 6 - Destruction of computer equipment and imaged copy media (paragraphs 66.49 to 66.53).
Annex  - Dealing with computerised records (process flowchart)


66.2 Introduction

The custody, storage, preservation and destruction of records is dealt with in Chapter 10. As far as possible the contents of that chapter should be applied to computerised accounting records. It must always be remembered that, although they are in a different format, computerised accounting records are in effect books of account, and as you would not write up books of account, you should not perform tasks that alter the data on a computerised system, even though this may be done at the touch of a button.

Computerised accounting records, like manual records, should not be relied upon alone, without reference to other indicators as to the financial health of the company or bankrupt.


66.3 Definition of accounting records and penalty for failure to maintain

The Companies Act 2006 requires a company to keep adequate accounting records, sufficient to show and explain the company’s transactions and the financial position (with reasonable accuracy) at any given time [note 1]. The books required can be recorded in any manner as long as they are capable of being reproduced in a legible form, which includes a company using computerised accounting records. The computer storage media (see paragraph 66.6 and Part 2), being the prime source of the stored information from which the financial position of the business should be readily ascertained, comprises the accounting records.

The Companies Act 2006 states at section 387(1) that where a company fails to keep accounting records, an offence is committed by every officer of the company who is in default.


There is no similar legal requirement to maintain accounting records for partnerships or individual bankrupts, but partners are under a duty to maintain records sufficient to account to another partner regarding partnership dealings, to deal with their tax affairs or to deliver up records in any insolvency proceedings.  Bankrupts are required to maintain records sufficient to deal with their tax affairs, account for any substantial property loss and to deliver on request, any records in their possession or control upon insolvency.  See Chapter 10, paragraph 10.2.


66.4 Descriptions and definitions used in this chapter


What elements does this comprise?

Further explanation


  • CPU (Central Processing Unit) - commonly referred to as a computer
  • Monitor
  • Keyboard
  • Mouse
  • Printer
  • Any other peripheral items used to read or record data such as external DVD or Zip drives

Machinery or “physical” elements of the system


Sets of coded instructions used by the computer to enable it to perform various tasks

Without software a computer is simply a set of electronic components. See further explanation at paragraph 66.5

Storage media


Hard drive/hard disk (within the computer) DVDs, CDs, data or memory sticks, flash drives, floppy disks, tapes, zip drives etc.

Items used to store and deliver data / the method by which data is stored or recorded, see also paragraph 66.6

External hard drive 

An external hard drive is a hard disk which is outside of the computer case

Provides additional memory and back up capacity,  and is another form of storage media



An exact electronic copy of the data held on the storage media.


Imaging of data is carried out by Forensic Computing Unit (see paragraph 66.7 and Part 2 of this chapter) to allow the official receiver to access the insolvent’s computerised accounting records



66.5 System and application software

Standard system operating software is usually added to the computer at its manufacture but other more specialised application software will also have been added, to allow the user to perform specific tasks required by the business. A package of software may have been acquired "off the shelf" from a retail outlet or alternatively a purpose-built system may have been installed by a software designer or engineer as a bespoke package to accommodate specific business requirements.  It is likely the operating system will be based on a (Microsoft) Windows package and the most common application software used by a small business will be either a Sage or Quick Books accounting package (or similar).

Lack of compatibility between various systems means that the same software must be used to retrieve the data successfully as was used to place it there in the first place. Data retrieval may be possible without the original software but when all the data is displayed or printed out, information can simply be a meaningless list of figures. The application software has to provide both the means to extract the data and the means to understand the figures themselves.


66.6 Common storage media

The storage media describes the method or mechanism used to store and deliver data, including accounting records data.  Early computers used punched cards to store data in a binary format, but the most commonly encountered methods of storage used in modern computers are hard disks within the computer, external hard drives, DVDs, CDs, data or memory sticks, flash drives, floppy disks, tapes, zip drives etc. The method of storage is not important as long as the computer can access the data. Modern storage media can be used in compatible computers and in most cases should be easily obtained and transported by the official receiver, to enable any accounting records held on the computer/storage media to be imaged and the accounting data examined.  The memory capacity of modern desktop and laptop computers can mean that large amounts of data are stored on the computer hard drive, and the official receiver should, wherever possible, secure laptops and base units of the computer,  as well as all the smaller, more portable storage media.  See paragraph 66.7 and Part 2 concerning the exact protocols to follow in recovering storage media (from trading premises or when delivered to the official receiver at interview) and using the Forensic Computing Unit (FCU) to provide images of relevant data from the media recovered.


66.7 Forensic Computing unit (FCU)

The Forensic Computing Unit (FCU) is part of Companies Investigation Branch (CIB).  The Unit has a wide range of specialist equipment and software for taking forensically sound copies of information held on or created by computers.  It also provides a number of services to official receivers’ offices to facilitate the handling of computer equipment and computerised accounting data encountered in insolvency cases, and in undertaking Financial Data Recovery (FDR) work (see Part 2 of this chapter).  Full details of the services offered by FCU and the protocols to follow can be found on the ORS/OROS intranet page at:

This approach has been developed with a view to dealing effectively with computers and networks used to store accounting and other data, to recover and be able to use such accounting data in investigations and, to preserve the integrity of that data for evidential purposes. The unit works to the Association of Chief Police Officers (APCO) guidelines on digital evidence, which is a standard understood and generally used in British courts (see also paragraphs 66.28 and 66.29).


66.8 Application of FCU procedures

(Amended December 2012)

The FCU procedures outlined in Part 2 are only applicable to standalone or networked PC's and laptops running variants of Microsoft Windows and Microsoft DOS. If the computer system does not fall into these categories FCU must be contacted, on a case-by-case basis, and requested to carry out a full analysis and to determine an appropriate action plan.

The most commonly encountered accounting software system is a SAGE accounting package. If the official receiver encounters other packages, FCU should be contacted immediately for advice, as it does not provide a detailed output solution (other than the data itself) for financial packages other than SAGE.

FCU can be contacted as follows:


Forensic Computing Unit

Companies Investigation Branch

Ground Floor

Insolvency Service

4 Abbey Orchard Street




66.9 Supporting documentation

It is usual to find in small businesses that only the books of prime entry and the principal ledgers have been replaced by a computerised system.  Increasingly official receivers will find they are dealing with companies and individuals where the business, in whole or in part, is conducted exclusively via a computerised system and/or the internet (e.g. where orders for goods are being received by e-mail or via a website). There may also be manual printouts of invoices, vouchers, credit notes, suppliers’ statements, etc. which are just as much a part of the accounting records as the electronic storage media and must not be overlooked when dealing with the computerised system. Refer to Chapter 10 for full guidance on dealing with custody, storage, preservation and destruction of accounting records generally.


66.10 Unauthorised alteration of accounting records

Computerised accounting records, unlike manual records, can be altered without there being any physical evidence of the alteration on the storage media. Whilst the system may incorporate security procedures to prevent unauthorised alterations by employees operating the system, the director or bankrupt is likely to have the authority and ability to make such alterations. Any security codes or passwords should be obtained from the director(s) or bankrupt and enquiries made by the official receiver as to the security protections in place to prevent alteration of or tampering with the accounting records.

To prevent any corruption of the data or allegation of tampering, on no account should the official receiver’s staff attempt to access the original computer or media recovered from the insolvent or use passwords provided by the insolvent to access the original computers holding data, see paragraph 66.14.  See Part 2 for full details of the correct recovery procedure for computer hardware and media.


[On to Part 2 - Action to be taken when computerised records are discovered]