Hi Jen65 Genreve_S
It sounds like whoever was doing the books prior to you was doing them on a correct accruals basis, but it should not be set that the actual leave when taken is reducing the provision due to wage increases and people maybe leaving prior to taking or becoming entitled to pro-rata long service etc, as well as the nightmare it will cause when you try and finalise the STP and if doing this correctly you do ALL reconciliations of the wages reported.
The best way to run it on the accruals basis, so the business owners provide and are aware of what they may be up for if they close down the business, is to run a leave entitlement report of LSL & AL on a regular basis (monthly, annually or quarterly) and then pass a general journal to the provision liability account to increase or decrease the amount, with the other side of that to go to an expense account called PROVISION for LSL & AL.
Thanks but I was just after journal entries its all sorted now with the Accountant.
