Accounting for DP Recoupment/Clearing

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Nov 18, 2022
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Philippines
Good day!

Can i ask how do you treat or record your DP recoupment in your books. As of our current practice, it is during invoice processing and due to duration of the project the down payment will be be fully recouped on the last invoice/progress bill processing. As down payment transactions are part of or budget utilization report it causes negative utilization on the year the invoice was processed which is usually a year after the service or goods were rendered or delivered.

If we record the recoupment at the time the services/goods are rendered /delivered by debit Accounts Payable and credit Project Prepayment, this will result to positive or abnormal balance in the Accounts Payable account and will be subject for financial audit.

I'm confused, and couldn't think of any solution or best practices.

Thanks.
 

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