Finding and booking accrued expenses at year end

How a firm finds a client's unrecorded expenses at year end, books them as accruals and makes sure they are not counted again when the invoice arrives.

By Achekam · 11 October 2026 · 5 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya

The electricity for the last month of the year is used before year end and billed after it. The auditors finish their fieldwork in one year and invoice in the next. A supplier delivers stock on the last working day and sends the paperwork a fortnight later. In each case the cost belongs to the year just ended, but nothing in the client's ledger says so.

Missing accruals are one of the most common reasons a draft set of statements changes after review. They are also one of the most common reasons next year's figures look strange, when the invoice arrives and the cost is counted a second time. This article covers both halves: finding the expenses, and making sure they are counted once.

What counts as an accrued expense

Investopedia defines accrued expenses, also called accrued liabilities, as expenses a company recognises in the period in which they are incurred, before they have been paid. ACCA's article on year-end adjustments describes the presentation: unpaid expenses that relate to the period are shown as current liabilities (accruals), and the profit or loss charge is adjusted to include them.

The question is not whether the invoice has arrived, but whether the client has received the goods or service. AccountingTools gives typical examples:

• interest owed on a loan before the lender's statement arrives;
• wages earned between the last pay date and the period end;
• goods delivered before the supplier's invoice arrives.

Add to those the recurring costs that are always billed in arrears: utilities, telephone and data, cleaning and security contracts, professional fees, and commission owed to agents.

Searching for what has not been recorded

Investopedia describes a sensible routine at each period end: book as many actual invoices as possible before closing the payables ledger, then analyse which invoices have not been recorded and accrue for those. At year end the same routine needs more digging. Places to look:

1. Invoices received after year end. Ask the client for the first weeks of the new year's supplier invoices and check the service or delivery dates, not the invoice dates.
2. Payments after year end. The bank statement for the new year shows what was paid; trace each significant payment back to the period it relates to.
3. Supplier statements. A statement at year end that shows more than the ledger is a direct pointer to missing invoices.
4. Contracts and standing charges. Rent, leases, maintenance agreements and subscriptions billed in arrears should leave a predictable trail.
5. Goods received records. A delivery note with no matching invoice is an accrual waiting to be booked.
6. People who know. The client's operations manager often knows about the plumber, the consultant or the courier account before accounts does.

Keep a schedule of what was checked, what was found and how each accrual was measured.

When the estimate and the invoice differ

Some accruals are exact because the invoice is already in hand. Others are estimates: the utility bill based on recent consumption, the legal fees based on the attorney's indication.

When the actual invoice later differs from the estimate, the difference falls into the new period. That is normal and expected. What matters is that the estimate was reasonable on the evidence available when the statements were finalised. If a materially different invoice arrives before the statements are signed, update the accrual; that is better evidence of the year-end position.

Reversing entries: counting the cost once

Investopedia's guide to accrued expenses explains the mechanics: the accrual is recorded by debiting the relevant expense account and crediting an accrued liability account, with a second entry in the following period to reverse it. It also warns that every accrued expense must have a reversing entry, otherwise the company risks recording both the accrual and the actual invoice. AccountingTools makes the same recommendation: record most accruals as reversing entries, so the reversal cancels them in the following period when the actual invoice is recorded.

A worked example in words. At year end, the firm accrues the audit fee: expense up, accrued liability up. On the first day of the new year, the reversal takes the liability back out and credits the expense. When the audit invoice arrives and is posted in the ordinary way, the expense account in the new year shows only the difference between the invoice and the estimate. Without the reversal, the new year would carry the full fee a second time.

Investopedia notes that many accounting systems generate reversing entries automatically when prompted. Whichever system the client uses, confirm the reversal actually happened by looking at the first month of the new year, not by assuming it did.

Booking accruals through Achekam

The route depends on whether the accrual is a year-end adjustment to the statements or a journal in the client's books.

• Year-end adjusting entries. Achekam's Studio lets staff post a year-end adjusting entry against the trial balance. If an entry turns out to be wrong, it is reversed with a record of who reversed it and why, never deleted. That correction trail is different from the new-year accrual reversal described above, which is an ordinary bookkeeping step.
• Next year's set. When a set is rolled forward, settings, policies, notes and wording carry over and every figure is rebuilt from the new trial balance, but adjusting entries are not carried forward. If an accrual lived only in the Studio, make sure it also reaches the client's ledger, or next year's opening position will not include it.
• Invoices that arrive after year end. Achekam can read supplier invoices and receipts into their fields and propose a journal for each, though scans and photos are read only when an outside OCR service or an image-reading AI key is set up. Every proposed journal, whether from a document, a bank line or an adjustment, is only a candidate: a person approves and posts it, and AI is refused both steps. Possible duplicates and low-confidence fields wait in the Intake Review Queue for a person, which is a useful checkpoint when an invoice arrives for something already accrued.

Closing the loop

A short checklist for the year-end file:

• Schedule of accruals, each with its evidence and how it was measured.
• Search of post-year-end invoices and payments, with the period covered.
• Supplier statements reconciled for major suppliers.
• Reversal confirmed in the first month of the new year.
• Last year's accruals compared with what was actually paid, as a check on the client's estimating.

Adjusting entries at year end sets these entries in the wider close, and auditors will find the matching procedures in searching for unrecorded liabilities. Next time a client's year-end pack comes in, ask for the first month's supplier invoices with it; most of the accruals are hiding there.

General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.