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Should Accounting & Audit Fees be accrued against the Fund's income in the year to which they relate or should they only be accounted for when paid by the Fund?
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Hi Ronald
Normal approach is to expense accounting and audit fees on a cash basis. That is if 2018/19 accounting & audit fees paid in October 2019 (in 2019/20) they are expensed in year paid being 2019/20. If fees are more than 1 year late in being paid some accountants do take up an accrual. Using an example if 2018/19 accounting & audit fees paid in July 2020 (2020/21) they could be taken up as a liability at 30/6/2020 so the expense is in the 2019/20 year.
As the accounts of a Fund are normally done as special purpose financial statements there is flexibility re whether you take up expenses on a cash or an accrruals basis.
It is common for the notes to the financial statements to refer to the statements having been prepared on a "cash basis" which is consistent with the above where normally the 2018/19 accounting / audit fees are paid in the 2019/20 and accounted for when paid.
Thanks
SMSF AAA