Imprest settlement

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Divya sharma (Querist)
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01 May 2012
is there any time limit for imprest settlement on returning to place(Ofc) from official tour outside the state.

and if employee has gone abroad for official purposes, than with in how much time of his returning to India bills to be obtained from him.
for booking of expense what rate of exchange should be considered ??
- on the date on which bills deposited and imprest settled
- average rate

and one more thing
if in between... imprest given and bills obtained date of closure of accounts arrives i.e31 march than
expenses booked next year will be considered prior period

Divya sharma

Divya sharma (Querist)
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11 May 2012 KINDLY RESOLVE ... ITS IMPORTANT

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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29 July 2024 When dealing with the settlement of imprest accounts, particularly in the context of official tours or travel, several accounting and administrative practices must be adhered to. Here’s a detailed breakdown addressing your queries:

### **1. Time Limit for Imprest Settlement**

**1.1 Domestic Tours:**
- There is no statutory time limit for settling imprest for domestic tours, but it is generally good practice for companies to set their own internal deadlines.
- Common practice is to settle the imprest within **15 to 30 days** of returning to the office to ensure timely accounting and reconciliation.

**1.2 International Tours:**
- Similar to domestic tours, while there is no legal mandate, companies often set internal deadlines for settlement.
- For international tours, it's advisable to settle the imprest within **30 to 45 days** of return to account for potential delays in obtaining and submitting foreign bills.

### **2. Obtaining Bills from Employees Post-Return**

**2.1 Timeframe for Bill Submission:**
- Employees should ideally submit all bills and receipts within **15 to 30 days** of returning from the official tour.
- For international tours, a period of up to **45 days** might be reasonable due to potential delays in collecting and translating foreign bills.

### **3. Rate of Exchange for Booking Expenses**

**3.1 Exchange Rate Considerations:**
- **On the Date of Bill Submission:** The rate applicable on the date of settling the imprest and booking the expense is commonly used. This approach reflects the actual cost incurred in the local currency.
- **Average Rate:** An average rate for the period in which the expenses were incurred can be used, but this is less common for individual expense items.

**3.2 Recommended Approach:**
- **Date of Expense Incurrence:** Generally, the exchange rate on the date the expense was incurred or the date of the transaction (i.e., the date on which the expense was incurred) should be used to ensure accurate accounting.
- If the bills are settled much later, it might be necessary to use the rate on the date of settling the imprest.

### **4. Handling Expenses Around Year-End**

**4.1 Accounting for Year-End Transactions:**
- **Prior Period Expenses:** If the imprest is settled, and bills are obtained after the year-end (e.g., after March 31), and the expenses relate to the previous financial year, these should be booked as prior period expenses in the previous year's accounts.

**4.2 Example Entries:**
- **If bills are obtained and settled after year-end:**
- For expenses incurred in the previous financial year but settled in the current year, adjust the previous year’s books by recording them as prior period adjustments.

**Example of a Journal Entry for Prior Period Adjustment:**
- **Debit:** Expense Account (e.g., Travel Expenses) ₹[Amount]
- **Credit:** Imprest Account (or appropriate account) ₹[Amount]

**4.3 Timing of Entries:**
- **For Current Year Accounts:** If the bills are received and settled in the current financial year but pertain to the prior financial year, they should be adjusted in the prior year’s books to reflect accurate financial reporting.

### **Summary**

1. **Imprest Settlement Time Limit:**
- Domestic Tours: Typically within 15 to 30 days.
- International Tours: Typically within 30 to 45 days.

2. **Bill Submission Post-Return:**
- Generally within 15 to 30 days, or up to 45 days for international travel.

3. **Exchange Rate for Booking Expenses:**
- Preferably use the exchange rate on the date the expense was incurred or the date of settling the imprest.

4. **Year-End Handling:**
- Expenses related to the previous financial year but settled after year-end should be adjusted as prior period expenses in the previous year’s accounts.

Implementing these practices ensures accurate financial reporting and compliance with accounting standards.

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