MANUAL JOURNAL ENTRY REVIEW POLICY
Effective Date
XXX
Organizational Scope
All finance departments within the ABC Group.
Policy Statement
Errors in processing manually entered journal entries (hand keyed or uploaded) into the general ledger system
could lead to an error in the financial statements if they are not detected and corrected in time. To mitigate this
risk, it is ABC Group’s policy that certain types of manually entered journal entries must be reviewed by someone
independent of the preparer/approver of the journal.
KEY POLICY STATEMENTS
•
Manual journals that are based on judgment or subjectivity are reviewed in full irrespective of their financial
value by an independent person.
•
Unless noted in ABC’s accounting policies and procedures, manual journal entries greater than or equal to $ or
local currency equivalents of XX/XX/XX by region are subject to an independent review. These include the
following:
− Equity account transactions
− Intangible account transactions
− Goodwill account transactions
− Tax account transactions (balance sheet and income statement)
− Manufacturing cost, amortization and impairment accounts
− Purchase and investment in companies (acquisition entries)
− Other categories
The reviewer should have adequate knowledge of the organization and should be independent from those who
prepare, approve or process the journal or are involved with the underlying transaction directly or indirectly (e.g.,
requester of a service). The reviewers should be appointed by the CFO or senior management to make up a team
of individuals to split the task every month.
The reviewers should have sufficient knowledge/experience to verify the validity and accuracy of the journal
entries. The review should include approving the journal entry with supporting documentation to confirm that:
•
The journal entry recorded in the ledger is a 100% complete and accurate representation of the supporting
documentation. A tolerance of XX% is permissible for exchange rate differences where the supporting
documentation is in a foreign currency.
•
The journal is approved as per the organization's policy.
•
Evidence of the review should be the reviewer’s signoff on the journal entry, which can be attached to the
journal entry supporting documents in the system or filed electronically outside the system.
1
Source: www.knowledgeleader.com
EXCEPTIONS FROM THE REVIEW
Any exceptions noted from the review beyond the tolerance levels will be reported to the CFO or financial
controller for addressing the matter with the relevant teams and making corrective adjustments as needed.
Evidence of follow-up from the review and adjustments, if any, should be retained along with the journal
supporting documentation.
EXCLUSIONS
Any journal entries that are posted by the system without manual intervention based on predefined criteria are
excluded from this review (e.g., system calculated depreciation, indirect taxes, payment discounts, etc.).
Note: This policy should be executed in conjunction with other policies/processes that require journal entry
approval and is not intended to override or circumvent any other policy that requires journal entry approvals below
the review threshold mentioned in this policy or for other types of transactions.
2
Source: www.knowledgeleader.com