[vsunjay]

An year end recognition payment is to be made to the employees for their balance of leave. Should the accrual be made at the year end or we should be making the monthly accruals?

[morgaine300]

That is actually entirely up to you. The year-end statements are the "official" ones where it really matters to have everything correct. Doing interim monthly or quarterly statements is entirely up to the company, and therefore how "correct" they are is also up to the company.

I'm kind of anal so I like monthly things as close to correct as possible. But you also have to consider the opinion of not only management/owners, but any outside users of those statements as to whether they want/need monthly statements as updated and correct as possible.

But regardless of anyone's opinion about what they want, you also have to take into consideration how material it is, and the cost-benefit. i.e. the worth of doing it compared to the time it's going to take to do it. In deciding if it's material, also take into consideration that it's the difference in numbers you're concerned about, not the numbers themselves. (As a quickie example, that means in December a balance got left at $100, in January it should be $90 and in February it should be $120. It's not those numbers that matter - if we don't adjust, then January is $10 too high, February is $20 too low. That's what I mean by the difference is what counts.)

Theoretically speaking, if monthly statements were totally "correct" you would adjust everything every month. However, that is rather time-consuming so there's where you have to consider the materiality and the cost-benefit issues, and how badly someone wants it that way. Even as anal as I am about it, there's many things I'll only adjust at year-end

Was that more than you ever wanted to know? ;)

[vsunjay]

Thanks, I is helpful