What auditors ask first about accrued expenses

Accrued expenses look simple until an auditor asks for the invoice that arrived in January for a December service. If the schedule only shows a round number labelled “utilities,” the sample expands.

Build each material accrual with three pieces: the calculation basis, the counterparty, and a pointer to subsequent settlement. For recurring utilities, keep the last three invoices and the meter period covered. For professional fees, keep the engagement letter and time summary even if the final invoice is outstanding.

In close review we flag accruals that grew more than twenty percent without a narrative. Growth is fine; silence is not. A one-paragraph note from the account owner — new warehouse lease, year-end legal matter, deferred maintenance — saves hours of fieldwork correspondence.

Reverse prior-period accruals deliberately. Old accruals left uncleared become a reconciling black hole and a favourite auditor follow-up. Your close calendar should include a “prior accrual clear-down” task owned by the same person who posts new ones.