USA Item ordered in June. Rcvd in July. Invoice is dated July. Which period do i record it in? My year end is June

[BRANDI BUFF]

I have an item ordered in late June but received in early July. The invoice is dated and received in July. Do i record it in June or July? My year end is June.

 

[Dave In Capital]

Materiality considerations would be at the top of my concerns. Would the users of the financials be misled by recording it one period versus another? For example, if it's a large expense that's going to affect your organization's going concern, then investors would likely believe they are being misled if it's recorded in July even though the invoice is dated similarly. These kinds of judgment calls are why the auditor's opinion letter makes note of concepts like materiality and reasonable judgment. As the PCAOB notes, a critical component requiring complex auditor judgment includes, but is not limited to,

The nature and timing of significant unusual transactions and the extent of audit effort and judgment related to these transactions;

 

[kirby]

Most companies follow the practice of recording the liability when the invoice is received.