Refund treatment in R&P accounts

Are deposits/refunds netted off in R&P accounts?

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I am the internal auditor for a small Parish Council which has recently appointed a new Chair. The PC uses R&P accounts (not I&E). Deposits are received for allotment keys which are then refunded when the allotment is given up. Previously, the receipt of the deposit was recorded as a receipt and the refund as a payment. The new Chair has argued that they should be netted off (i.e. treat the refund as negative income). I am certain he is wrong as the correct treatment is outlined in NALC guidance "5.45. Where a credit note or refund is issued to a customer or received from a supplier, the two amounts may be “netted off” to reduce the value of the original budget line (for example hall hire or equipment repairs). This ‘netting off’ only applies to accounts prepared using the income and expenditure method and not the receipts and payments method"

Can anyone help me to convince him?

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By Paul Crowley
19th Jun 2024 16:11

I would be showing the receipts as receipts and payments as payments, because that what it says on the tin.
For a church or charity the income from an event is a receipt and the costs are a payment. two figures, not a profit on the event.
Those keys I would see as similar.
What is it about newbies to the system wanting change for the sake of change?
A basic accounting concept is consistency.
Your NALC guidance seems to be good enough to me.

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