Re: Reversing entry for previous years unfulfilled creditors due


Where does FRS 5 seem to support this?

FRS 5 is trying to ensure that the accounting principle of substance
over form is used.

I don't want to get into a long discussion over this. FRS 5:

4 Liabilities:- An entity's obligations to transfer economic benefits
as a result of past transactions or events.

Personally, I believe that the date you should recognise the
accounting/audit fee is when the event of the audit occurs, and not
take it back into the previous accounting year. The benefit of the
audit is gained post year end, to match with the liability which
should therefore recognised post year end also.

I realise I am in the very much minority here, but I don't believe it
is incorrect to do what I state. Most counterarguments from colleagues
run along the lines of 'But that's what we did last year' (following
the old 'Why did the auditor cross the road?' joke) or state that the
company is legally obliged to have an audit or prepare statutory
accounts, which whilst true doesn't mean you should accrue it back
before the audit occurs (on that basis, I assume that it is perfectly
reasonable to accrue the 2009 to 2647 years car insurance liability
for the company fleet, because it is a legal liability to insure
vehicles).

I very much respect your opinion here Peter, I've lurked a long time
on this newsgroup but I do disagree on this point. It's a moot point
however. Most other accountants will take the view of accruing it
back. I do it, I acknowledge it, but I just disagree with it.

Thanks,

Steven
.

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