March 31, 2014 •
Ask the Experts – What Accounting Method Should You Use for Lobbyist Expenditures?
Q. I am currently a registered lobbyist who files reports on a monthly basis. I incurred a permissible meal expenditure on a covered official at the end of last month. However, I did not pay for the expenditure until I received my credit card bill this month. What date should I use to report the expenditure?
A. A common question concerns what accounting method to use for the reporting of expenses. The accrual basis of accounting reports expenditures according to the time the benefit is given. The cash basis of accounting reports expenditures according to the time it is actually paid.
The exact accounting method used depends on the jurisdiction in question. Both Arizona and Michigan prefer the accrual method of accounting. An expenditure is reported when it occurs or is given, not when it is paid. Indiana provides for activity reports to be filed on a cash basis. South Carolina also follows this method requiring an expenditure to be reported at the time it is paid.
Some states do not have a set accounting method to be used when reporting expenditures or permit either method to be used. In California, an expenditure should be reported at the time the benefit is given; however, if it is reported when the money is paid, the actual date of the expenditure should be noted. Pennsylvania allows a registrant to use any reasonable methods of estimation and allocation. However, once a method of accounting is chosen, filers should be consistent in its use. The filer should also keep an internal record of the accounting method used in case there is an audit by the Pennsylvania Department of State. Texas law indicates an expenditure does not have to be reported until the amount is readily determinable. An expenditure made by a credit card may be reported either according to when the expenditure is made or when the bill is received.
After confirming an expenditure is permissible, you must include it on the proper report. Consult with your jurisdiction’s filing office to determine the accounting method used for the disclosure of expenditures.
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