Provision for unused vacation

[krobs]

Hi there,

I just want to know why employer orders employees to use their vacation before balance sheet days. I know that means less provision in financial statements but it really does matter? Provision and used vacation hit into P&L so where is the point of order us to use a left vacation in the current year?

Thanks for your help

 

[UncleSam]

First if he has EVERYONE use it then there would be NO provision in the financial statements which is a lot different than LESS provision on the balance sheet.

As well are his financial statements audited? I can tell you having worked as an auditor we would then require accompanying schedules and estimates if the amount on the balance sheet provision was high enough and material in order to collaborate the amounts. If your employer has no employees carryover vacation or if he does and the amount is small that helps to make the audit go smoother.

Finally, if you are allowed to carry it over AT ALL consider yourself fortunate. All the companies I've worked with had "Use it or lose it" policies because many employers just don't want the prospect of having to pay an employee for fives weeks of vacation in a row.

 

[krobs]

Thanks for your response.

Yes, my company is audited. Do you think just that this is a reason why he orders us to use left vacations?

P&L in both cases looks the same, right? Maybe it is some issue for recipients of financial statements?

In my country, you have a right to use the previous year's vacation before September the current year After this time you lose your vacations.

 

[kirby]

Most straightforward method: just ask your boss.

 

[UncleSam]

Nice dude, maybe I'll have to move to Lithuania just so I can have more vacation, haha.

Any way, yes the P&L stays the same but it can heavily affect the balance sheet which is what an auditor would probably primarily look at. Audits are headaches enough for companies so anything that can be done to make it simpler, such as having low/no accrued vacation helps it to go smoother.

 

[krobs]

Just ask my boss, it isn't a simple thing. There are more than 3k workers, I even don't have any contact with a person who can respond to my question

UncleSam, yeah we are waiting for you Thanks for the explanation, you are right probably.