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Dear Tutor,
Kindly explain when does the legal obligation arise:
If you have engaged the services of a consultant and is not billing you in a monthly basis, can you raise a provision in the meantime?
Auditors do not normally bill on a monthly basis, can we raise a provision in between their invoices?
Where you have taken delivery of goods which you have ordered but have not been invoiced, can you make a provision based on a quoted price?Hi,
Provisions are accounting for uncertainty, and the potential future out flow of expenditure. The key surrounds the uncertainty, as the issues that you have identified above do not involve uncertainty as they are just instances where you have not been billed on time for the service that you’ve used. You would simply accrue for the costs that you have incurred as you use the service or when you purchase the goods.
Thanks
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