Home / Guides and tools / Audit-ready WIP
Audit-ready WIP starts with a journal of every movement
Every hour logged adds to your WIP, every correction changes it and every invoice relieves it. DAY ONE posts each one to a WIP journal as it happens, so you can report your WIP as at any date and show exactly how it got there.
Three questions follow every WIP number
At month-end the report shows one number for work done and not yet billed. The CEO asks when it becomes cash. The CFO, and later the auditor, ask whether it is right.
How did it get here?
Can you explain why this value counts as earned, not only that hours were logged?
What sits behind it?
Can you show the time, expenses and approvals behind the balance, not only the summary?
What is still open?
Can you name what is uncertain or waiting on a client, so it is visible and not buried?
If you cannot answer all three, the balance is fragile, whatever the report shows.
Reviewers read it the same way. Deloitte and EY summaries of SEC comment letters (2024 to 2025) show revenue recognition remains an area of scrutiny, with repeated focus on significant judgments, the measure of progress and how contract balances are derived.
The WIP journal posts every accrual, change and relief
Three kinds of entry, each posted when it happens and each tied to its source.
Accrual
Work is done and logged. Its value goes into WIP.
Change
Something moves the balance. An invoice is rejected and its value returns to WIP.
Relief
An invoice is raised. The value leaves WIP and becomes a bill.
WIP on any date is the journal up to that date.
One engagement, told as a journal
Three days of time, one invoice, one rejection. Each line is a posting, and the last column is the WIP after it.
An example at $250 an hour. The figures are invented: not a client and not a forecast.
| Date | Posting | What happened | Amount | WIP after |
|---|---|---|---|---|
| 3 Nov | Accrual | Six hours logged | +$1,500 | $1,500 |
| 4 Nov | Accrual | Eight hours logged | +$2,000 | $3,500 |
| 5 Nov | Accrual | Four hours logged | +$1,000 | $4,500 |
| 7 Nov | Relief | Invoice raised for the engagement | −$4,500 | $0 |
| 8 Nov | Change | Approver rejects the invoice; its value returns to WIP | +$4,500 | $4,500 |
| 10 Nov | Relief | Corrected invoice raised | −$4,500 | $0 |
WIP as at 7 Nov: $0. As at 9 Nov: $4,500, and the journal says why.
What it changes for the people who own the number
The same journal answers both questions.
For the CEO: billing and time to cash
You see what is waiting to be billed as it builds, engagement by engagement, so invoices go out sooner and cash follows. A rejected invoice returns its value to WIP, so nothing waits unseen.
For the CFO: books you can stand behind
The WIP balance is the journal, and every line traces to the time, expense or invoice behind it. At month-end you read the number; you do not rebuild it. Your accounting system stays your ledger.
Could your WIP tell its own story?
Five questions, answered for your firm as it works today. Nothing is stored or sent.
Where the journal shows up in DAY ONE
A WIP line mirrors the status of its source. Finance can send time back to the person who logged it. A change is its own contract, approved by a named approver and recorded in the approval history.
Questions about audit-ready WIP
Can't see your question? Ask us directly.
What is a WIP journal?
A record of every movement in work in progress: an accrual when work is logged, a change when something moves the balance, and a relief when work is invoiced. The balance on any date is the journal up to that date.
What does audit-ready WIP mean?
WIP is management's current claim about value created but not yet invoiced. It is audit-ready when you can show the method used to decide the value is earned, the source records behind it, and what is still uncertain, conditional or unresolved.
Can I report my WIP as at a past date?
Yes. Every movement is posted to the journal when it happens, so the balance on a date is the entries up to that date.
What happens when an invoice is rejected?
Its value is released back to WIP and posted to the journal as a change, so the balance stays right.
Why can more logged hours make WIP less reliable?
Hours and costs can be a fair measure of progress under IFRS 15 and AASB 15, but there may be no direct link between effort and value passed to the client. Rework, waste and delay add hours without adding earned value.
What if we answer no to some of the five questions?
If more than one or two land on no, your WIP may look clean on the surface while carrying assumptions that would not survive scrutiny. Take the self-check.
Where does this show up in DAY ONE?
A WIP line mirrors the status of its source, so you can trace it to the time entry, expense or invoice behind it. See Invoicing and WIP.
Get the guide as a PDF
We will email you a copy to keep and share with your team.
Talk through your WIP
Tell us which of these questions you could not answer today, and we will talk them through.