Accounting for Services

Revenue from services

• the e-invoice (ESF) for services is issued in the electronic system (Article 47 of the Tax Code);
• cancellation of services or a change in terms means an adjustment of the VAT base (Article 257);
• under IFRS — recognition at a point in time or over time as the service is performed (IFRS 15).

Key accounting issues

• When revenue is recognized: on the act, by stages or as the service is rendered
• Accounting for long-duration services and services spanning reporting periods
• Advances received and how they differ from recognized revenue
• Documentary evidence that the service was rendered
• Accounting for direct costs under specific contracts

Documents decide everything

A service is intangible, so the only proof that it was rendered is documentation. An act of completed services (the signed acceptance document used in Uzbekistan) that shows what exactly was done, in what volume and with what result protects against both inspectors' questions and disputes with the customer.

A formal act with a generic wording creates risk for both sides: for the provider — on revenue, for the customer — on recognizing the expense.

Services spanning periods

A service started in one period and completed in another requires a defined method of revenue recognition. Recording the full amount on payment is a common mistake that distorts the results of both periods.