Accrued Audit Fees Journal Entry
What Are Accrued Audit Fees? When a company hires an external audit firm, such as a chartered accountant or auditing firm, to examine its books of accounts, financial statements, internal controls, and financial records , the company has to pay professional charges known as audit fees . An audit helps a company verify the accuracy of its financial information and identify possible errors, accounting mistakes, irregularities, or fraud risks . However, sometimes the audit work is completed before the company makes payment to the auditor. In such a situation, the unpaid audit fees become an obligation of the company. These unpaid charges are known as: Accrued Audit Fees Outstanding Audit Fees Audit Fees Payable In simple words, accrued audit fees are audit expenses that have already been incurred by the company but have not yet been paid to the audit firm. According to the accrual accounting concept , expenses must be recorded in the accounting period in which they are incurred, reg...