What Is a Deferred Expenditure?

Deferred assets refer to various expenditures that have no exchange value and are not transferable. They are consumed once they occur, but can create future income for the enterprise and can be offset from the accounting period of future income. Deferred assets also refer to other expenses that can not be fully included in the current year's profit and loss, except fixed assets and intangible assets, which should be amortized over a longer period in subsequent years, including start-up costs, leased fixed asset improvement expenditures, and the amortization period. Long-term deferred expenses for more than one year.

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Deferred assets are sometimes called deferred expenses or long-term deferred expenses.

Deferred assets are not all

Start-up fee

The start-up costs are the actual expenses incurred during the establishment of the enterprise. Including staff salaries, travel expenses, office expenses, staff training expenses, printing expenses, registration fees, research fees, lawyer fees, accountant fees,

Defer

To account for deferred assets,

Because deferred assets include the content of "other expenses to be assessed", and this "other" is not specifically referred to, some companies are more free to use this subject. During the audit, we found the following issues that should be noticed.

Deferred assets

Problems

1. Use deferred assets as a talisman to cover operating losses.

2. Use deferred assets as a shelter for potential losses.

3. Use deferred assets as a regulator of profits.

Countermeasure

First, check whether the deferred assets are worthy of the name. In the audit, it should be regarded as a key item, especially for other deferred expenses, and the nature of the expenses should be reviewed. If it is indeed an expense or loss that has an impact on the business activities in the subsequent years, it can be considered for inclusion; if it only has an impact on the business activities in the current year, it cannot be included.

Deferred assets

Secondly, it is necessary to check whether the amortization period of deferred assets conforms to the principles of legality, rationality and consistency. If there are clear provisions in the accounting system, pay attention to whether the amortization period meets the requirements of the system when auditing; if there is no clear provision in the system, you should judge whether the amortization period is reasonable based on the benefit period; after the amortization period is determined, check the operation Is it consistent with the principle of consistency?

Finally, it is necessary to check whether the accounting is standardized. Whether the procedures for reportable approval are complete; whether the accounting treatment of accounting and amortization is correct, etc. Strengthening the audit of deferred assets can ensure the authenticity, accuracy and rationality of accounting information.