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HomeMy WebLinkAboutB-03 - New Rules on Reporting Accrued Expense - Form 460, Schedule FNew Rules on Reporting Accrued Expenses WHAT'S NEW WITH "ACCRUED" FPPC Form 460 - Schedule F Previously, when you would report an expense which you accrued in one reporting period but paid in another, that expense would only be reported during the period it was accrued and you would not itemize that expense again. Now, you must continue to itemize that accrued expense through each reporting period until it is paid in full. Example: During the first six months of 1999, you ordered and received literature from a printer at a cost of $2,500, but had yet to pay the printer by June 30. Report the $2,500 unpaid bill as an accrued expense on Schedule F of the semi - annual statement. After that reporting period, you paid the $2,500 bill in full. On your next statement, itemize the accrued expense again on Schedule F and report a beginning balance of $2,500, a payment of $2,500, and a balance owed of $0. You would not report this accrued expense again. Another Example: Perhaps the payment made to the printer was only $1,000, leaving a balance owed of $1,500. On your statement, you will again itemize the accrued expense and report a beginning balance of $2,500, a payment of $1,000 and a balance owed of $1,500. You will continue to report this accrued expense on subsequent statements until the obligation is paid. If you incurred additional expenses to this printer during the period, you would report that amount as well. • Each time you make a payment, that payment will also be reported on Schedule E as expenditure. HOW TO REPORT ACCRUED EXPENSES ON YOUR FIRST FORM 460 If you have an accrued expense of $100 or more outstanding from the previous period, itemize the name and address of the payee /creditor and the appropriate code describing the expenditure on Schedule F. Report the outstanding balance as of the beginning of the reporting period, any additional amounts incurred to this vendor, any payments made against the debt during the reporting period and the outstanding balance as of the end of the reporting period. (It is not necessary to re- itemize sub - vendor payments that have been itemized on a previous statement.) Remember!! Continue to report the accrued expense on subsequent statements until it is paid in full. REPORTING ADMINISTRATIVE EXPENSES: There are certain expenses that may carry over from one reporting period to another that you do not have to report as accrued expenses. These expenses include regularly recurring administrative overhead such as rent, utilities, phones, . campaign workers' salaries, etc., if the payment due date has not occurred at the end of the reporting period. Campaign workers' salaries only include payments to those individuals for whom the committee is paying federal and state employment taxes. Consultant contracts and contracts with independent contractors are not • considered regularly occurring administrative overhead of a committee. ANSWERING YOUR QUESTIONS: Q: When are unpaid bills reportable as accrued expenses? A: The basic rule is that you must report an accrued expense any time you have received goods or services but have not paid for them by the end of the reporting period. Q: What if I haven't received an invoice from the vendor yet? A: If you have received the goods or services, you must report the accrued expense even if you have not received an invoice. If you do not know the exact amount, you may estimate the amount of the expense. When reporting an estimate, note that fact on Schedule F. Q: We have a contract to pay our campaign consultant $1,000 per month. If the closing date of the campaign statement falls during the middle of the month, say March 17, must we report an accrued expense for the period March 1 through March 17? A: No. When you have agreed in writing to pay a contractor a set amount at regular intervals, it is not necessary to prorate the amount owed to the contractor if the reporting period closes before the end of the contract period. • Q: We reported an estimated accrued expense of $5,000 to a printer. The actual amount owed was $4,500. What do we do? A: You can amend the statement on which you reported the $5,000, or you can correct the amount on a subsequent statement by doing the following: On Schedule F, column (a), report an outstanding accrued expense of $5,000. In column (b), the amount incurred this period, report a negative $500. If you made any payments on the accrued expense during the period, report that amount in column (c) and the outstanding balance in column (d). If you paid more than the estimated amount, report the $5,000 in column (a), the amount over the estimate in column (b) as a new accrued expense, any amounts paid in column (c), and the outstanding balance in column (d). Be sure to make the correction on the next statement filed after determining the correct amount. Also be sure to note on Schedule F when you are correcting estimates. Q: When an accrued expense is owed and there are subvendor payments, when are the subvendors reported? For example, if we report an accrued expense owed on a credit card and list the subvendors, must we re- itemize the subvendors again on Schedules E and F when the accrued expense is paid? A: No. It is not necessary to re- itemize subvendors when payments are made on accrued expenses, or if an accrued expense is reported on more than one statement. In this example, the subvendors must be reported on the first statement disclosing the • accrued expense owed to the credit card company. On subsequent statements, only the credit card company must be itemized.