Building a Controlled PO Accrual Reporting Process
Across Procurement and Finance Systems
Accrual Reporting at the Fault Line
Accrual reporting for purchase orders sits right at the fault line between operational reality and financial reporting. On one side, procurement and receiving activity continues to move; on the other, finance needs a controlled "cut" of information that can be reviewed, explained, and posted with confidence.
In many organisations, the report itself is not the problem. The risk usually comes from everything around it: how the reporting cycle is refreshed, how outputs are stored, how exclusions are applied, how manual adjustments are justified, and how journals move through review and posting. When those surrounding practices are informal, accruals can become difficult to reconcile, hard to audit, and unnecessarily dependent on a few individuals who "know how it works."
What the Business Is Trying to Achieve
A PO accrual report is typically used to identify procurement activity that should be recognised in finance before an invoice is fully processed. In practice, most organisations separate what they're looking for into a few common buckets:
The aim is not just to "get a number." The aim is to create a controlled narrative: what the accrual represents, why it is appropriate, what was excluded (and why), what was adjusted (and why), and who approved the final posting.
A Proven Workflow Pattern That Scales
Across different organisations and toolsets, a robust accrual workflow tends to follow the same shape:
1) Refresh the Reporting Cycle Intentionally
Accrual reports rely on underlying supplier and coding structures being up to date. A controlled process makes the refresh explicit and repeatable (including how refresh completion is evidenced).
2) Run Reports From a Controlled Reporting Layer
Extract accrual reports from a reporting database or analytics layer rather than the transactional user interface. Parameters, logic, and versions must be stable and governed.
3) Save Outputs in a Versioned Repository
Keep a clear separation between raw outputs (what the system produced), working files (where review/apportionment happens), and final evidence pack (what supported the journal).
4) Review and Apportion Using Defined Mapping
If mapping rules aren't defined and maintained, apportionment becomes subjective. Ensure the same transaction is treated consistently.
5) Apply Exclusions Through Policy, Not Habit
Maintain a set of exclusions (certain categories, projects, or accounting classifications that should not be accrued in the same way). Ensure they are controlled, documented, and approved.
6) Adjust Anomalies With Structured Rationale
Ensure every adjustment has a rationale, an approver, and a clear link back to the underlying transaction. Manual edits done "line by line" can break reconciliation.
7) Create, Review, and Post the Journal
Separate preparation from review and posting. Even where teams are lean, create meaningful separation using role-based permissions and formal review checkpoints.
Where PO Accrual Processes Typically Fail
If you want to stress-test your current approach, these are recurring weak points:
None of these issues require a major system replacement to fix. They require process clarity, governance, and light operational discipline.
Controls That Make the Process Defensible
You don't need a heavy control framework to improve confidence. In most environments, a small set of well-placed controls changes the maturity of the process dramatically:
Evidence the Refresh and the Report Run
Capture how you know the report reflects the intended cut of data. The goal is reproducibility.
Define "Raw vs Adjusted" Clearly
Keep the original report output intact. Perform review and apportionment in a separate working copy.
Make Exclusions Explicit and Owned
Maintain an exclusions register with scope, rationale, owner, and approval method. Treat it like policy, not preference.
Standardise the Adjustment Narrative
Where adjustments are made, require a short, consistent rationale and a clear reference to what triggered the change.
Enforce Segregation of Duties Through Workflow Design
Even without sophisticated tooling, enforce a "prepare → review → post" sequence through permissions and sign-off checkpoints.
Build Reconciliation Thinking Into the Routine
The process should naturally produce explanations for differences as a by-product (not as a scramble later).
Ready to Improve Your PO Accrual Process?
Build a repeatable, auditable, and defensible PO accrual process that stands up to scrutiny.
Questions? Contact our procurement and finance specialists or explore more insights.