USA Audit Accruals

[Jenny Herrington]

My company is being sold and we have multiple years of audits that have not been completed. I have been accruing every year for the audit expense and I have a large reserve.

Question: Can I remove my full accrual because all audits have been stopped and will not be completed?

 

[kirby]

You need to contact the auditors and ask for a final billing, then you can go from there.

 

[Jenny Herrington]

You need to contact the auditors and ask for a final billing, then you can go from there.

I am paid in full to the Audit Firm, the policy before I came on board was to accrue the total cost of the audit in the year it was related to regardless of the actual bills. So this is only an accrual without any funds tied to it.

 

[kirby]

Ok, then if you have no real liability to pay you need to reverse the accrued liabilities on your books. Example entry: DR Accrued liability for audits CR Audit expense.

 

[Jenny Herrington]

Perfect! That is what I did. I was not sure if I needed to continue accruals like we were not a going concern.