UK Provision for expenses

[khan102]

Hi, Is it ok to create accrual/provision in accounts for festival parties such as Christmas over the period and when the actual cost incur, provision can be reversed? If it is done in this way cost will spread over the period?

Will auditors allow this kind of treatment? if yes is there any reference where it has been done in the past?

 

[smartthought]

As a former auditor, I would not allow that because accruals are for expenses that are incurring over the period and if a party's expense that should take place in December hasn't happened yet from January through November, then there is no reason to show expense during those months. Typically if they were earning/vesting the expense during the year, then it should be accrued.