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Accruing for redundancy

Accruing for redundancy

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Since Furlough has put a delay to some likely redundancies I was wondering if it would be allowed if we put an accrual for redundancy into some statutory accounts with a May period end. My logic (if you can call it that!)  is that it could be on the basis that had Furlough not been introduced the redundancies would gave happened in the previous financial year. Any thoughts please........

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By tom123
04th Aug 2020 08:18

accounts should be prepared on a going concern basis, unless there are compelling reasons not to.

So, if you were already committed to redundancies at the balance sheet date, you could include the accrual.

(However, you would also have to value all the other assets on a break up basis.) -

EDIT removed that statement - I was (sadly) thinking of a small charity I am trustee of that is facing closure. Obviously you can make redundancies without shutting the business.

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blue sheep
By NH
04th Aug 2020 07:04

no

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By paul.benny
04th Aug 2020 07:42

Did you announce the redundancy programme and notify the individuals concerned before year end?

If no, then you can't accrue - there was no liability.
If yes, you probably should accrue - check s21.11C of FRS102 for the specific conditions.

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Caroline
By accountantccole
04th Aug 2020 09:38

Only if the redundancy process was underway at the year end

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