Invoice audit is the check of each supplier invoice against the purchase order and the delivery record before any money is paid. It is also called invoice verification or invoice matching. It is part of accounts payable (AP) automation.
Suppliers' invoices are often wrong. Usually the mistake is honest: a wrong price, a wrong quantity or the same bill sent twice. Sometimes it is fraud, such as a fake invoice from a supplier that does not exist. Once money is paid, it is hard to get back. So the check must happen before the payment.
The audit compares three documents. The purchase order says what the company ordered and at what price. The goods receipt note (GRN) says what actually arrived at the warehouse. The invoice says what the supplier is asking to be paid. If all three agree, the invoice is approved for payment. This is called a three-way match.
Consider a paint factory in Vadodara that orders 2,000 litres of solvent at ₹95 a litre, for ₹1,90,000. The warehouse records 2,000 litres received. The invoice arrives for 2,000 litres at ₹98 a litre, ₹1,96,000. The audit finds a difference of ₹3 a litre, or ₹6,000 in total. It holds the invoice and sends it to an employee in the AP team, with the reason. The employee asks the supplier, who sends a corrected invoice for ₹1,90,000.
The audit also looks for other problems. It checks whether the same invoice number has already been paid. It checks whether the supplier's bank account details have suddenly changed, which can be a sign of fraud. It checks that the GST on the invoice is calculated correctly. In India, the invoice can also be compared with the supplier's own GST filings, through GST reconciliation. Each check produces a list of exceptions: the invoices that need a person to decide.
The same check exists in logistics. A company that ships goods receives a bill from the transport company for each truck or container. Freight bill audit checks each of those bills against the agreed rate and the actual shipment. The idea is the same: compare what was agreed, what happened and what is being charged, and pay only when they match. Invoice audit happens before the payment. Matching payments with records after the money has moved is called reconciliation.