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GR/IR stands for Goods Receipt/Invoice Receipt.GR/IR clearing accounts are basically intermediate accounts found only in the SAP ERP Module.

Goods Received / Invoice Receipts Process

Audit of GR/IR Clearing Accounts

The Goods Received / Invoice Receipt (GR/IR) is a non-vendor specific liability account created in the County's enterprise resource system (a.k.a. SAP) that functions as a clearing account for goods and minor services purchased on a three-way match purchase order. These may be a plain purchase order (PO), a contract release or a priority purchase order.

The three-way match mechanism enables the matching of information on the purchase order, receipt and invoice. The receipt is generally transacted in the system prior to the invoice. In SAP, the receipt of a good or service will charge (debit) an expense account and credit the GR/IR account. The entering of an invoice will charge the GR/IR account and credit the vendors' payable liability account. When the receipt and invoice quantities agree, the transactions offset and SAP will clear the GR/IR account. The system allows for price discrepancies within allowable tolerances. For transactions involving invoice prices that exceed the purchase order prices above the allowable tolerances, the GR/IR account should clear however approval will be needed later to pay the invoice.

When goods are received by the company the following entry is passed:-

Raw Material/Stores/Etc. …Dr ----
To GR/IR Clearing Raw Material A/c ----

This entry is known as MIGO in SAP. The crux of this entry is that goods have been received from the supplier but the invoice has yet not been raised or the invoice is yet to be passed by the Quality Department/Receiving Department.

When the company receives the goods, the goods received become the company’s asset but it has to create a corresponding liability as well.  Thats how when the company passes MIGO the goods received become our asset while GR/IR Clearing account becomes our liability.

Now when the said invoice is cleared by the departments the following entry is passed:-

GR/IR Clearing Raw Material a/c ..Dr  ----
To Vendor/Supplier A/c   ----

The above entry is known as MIRO is SAP.

Subsequently when the payment is made to the Vendor the following entry is passed:-

Vendor A/c ..Dr ----
To Bank A/c  -----


A Ltd. has made a Purchase Order for the purchase of a Machine from B Ltd worth Rs.100000.B Ltd ships the said machine to the premises of A Ltd on 30th November. B Ltd gives A Ltd a credit period of 15 days for making the said payment of Rs.100000.

B Ltd sent A Ltd the invoice on 13th December and the said was passed by accounts on 15th December and the payment was duly made via bank on the same day.


The following would be the various entries passed in the books of accounts of A Ltd:-






30th November

Stores a/c ..Dr

To GR/IR Clearing Stores a/c




15th December

GR/IR Clearing Stores a/c  ..Dr       

To B Ltd




15th December

B Ltd     ..Dr

To Bank A/c




The GR/IR Accounts are facilitation accounts and should logically have no balance.

Audit of  GR/IR Clearing Accounts:-

The audit objective would be to ensure that the GR/IR process's policies and procedures provide efficient and effective controls over the timely and proper resolution of outstanding item(discrepancies)

The audit scope would be to:

1.  Determine if the policies and procedures are adequate.
2.  Review selected department's compliance with policies and procedures.
3.  Age the open items reports to determine if the timely clearing of outstanding items.
4. Identify any problems inhibiting the timely clearing of Outstanding items.
5. Evaluate the training provided to staff members processing

GR/IR transactions.

The audit Methodology would to:-

1. Downloading of accounts with open entries from SAP.
2. Segregation of open entries into debit entries and credit entries.
3. Aging of Open entries.
4. Enquiring the reasons as to open entries which can be any of the following:-

A. There may be a dispute as to the material supplied.
B. The invoice may have been misplaced.
C. The invoice may not have been sent by the vendor.

Published by

Ramanreet Singh
Category Audit   Report

12 Likes   323 Shares   126864 Views


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