Accruals and deferrals (ratei e risconti) serve to allocate expenses and revenues to the financial year in which they economically arise. Therefore, the decisive factor is not exclusively the date of the invoice or payment, but rather the period to which the service actually relates.
This period allocation ensures that the annual financial statements provide a correct representation of the economic situation of a company and that the results of different financial years remain comparable.
Correct recognition of accruals and deferrals is therefore an essential part of preparing annual financial statements. They directly affect the reported annual result as well as the tax bases for IRES and IRAP. Accruals and deferrals are particularly relevant for regularly recurring business transactions such as insurance, rent, lease agreements, maintenance contracts, software licences, interest or advance payments received from customers.
In the Italian balance sheet format, accruals and deferrals are shown separately on the assets and liabilities side:
In the case of risconti, a payment or revenue has already been recorded, but economically it relates wholly or partly to a future financial year.
Active risconti (risconti attivi)Example:
A company pays an insurance premium in December for the period from December to November of the following year. The portion relating to January to November of the following year is recognised as an active risconto (risconto attivo) and is only recognised as an expense in the following year.
Example:
A customer pays in December for a maintenance service covering the entire following year. The portion that has not yet been earned is recognised as a passive risconto (risconto passivo) on the liabilities side of the balance sheet.
Unlike risconti, ratei relate to expenses or revenues that are economically attributable to the current financial year, even though the payment or invoice will only occur at a later date.
Active ratei (ratei attivi)Example:
A company is entitled to interest income for the last months of the year but receives the payment only in the following year. The proportionate interest income is recognised as an active rateo (rateo attivo).
Example:
Interest on a loan accrues in December but is only paid in January of the following year. The interest expense incurred up to the end of the year is recognised as a passive rateo (rateo passivo).