The Parish Council chooses to report accounts on an Income and Expense basis.
A few regular bills (e.g. mobile phone) are paid by direct debit. The invoices have a date and tax point in one month (e.g. rental and calls for March) but the direct debit is not taken by the supplier until sometime the following month (bank accounted debited in April for the March Bill which is in the next financial year)
I would expect to make an adjustment in the closing year showing the invoice received in March as a Creditor and include it in our VAT return. That entry then reconciles to the bank account in April when payment is actually made.
The auditor is now saying that bills paid by direct debit should only be entered into the accounts on the data payment is taken by the supplier which effectively puts the expense into the next financial year.
To my mind this advice goes against GAAP for Income and Expense reporting
Does the group have any guidance on which method is correct for a Parish Council?