Understanding Journal Entries
A resource you can use if there is a complex IT environment surrounding JEs.
Who are IT specialists?
This is the type of entry used for depreciation:
What is Automated?
This assertion is addressed by this control: Verifying that all entries were input correctly:
What is Accuracy?
This is used to test systems around recording JEs.
What is GITC testing?
An informative way to gain an understanding of a clients JE process:
What is a Walkthrough.
This is an assumed firm wide risk of JEs:
What is Fraud: Man. Override?
This assertion is addressed by this control: Reviewing submitted journal entries for proper accounting period.
What is Cutoff?
This is the first step in testing the operating effectiveness of the controls over journal entries.
What is assessing the RAWC over JEs?
Name the four Types of JEs?
§ Topside (post-close) entries and other adjustments
§ Nonstandard entries
§ Standard manual entries
§ Automated entries
the generic "what could go wrongs" related to journal entries are:
o Not valid (Occurrence)
o Not accurately recorded (Accuracy)
o Recorded in the wrong period (Cut-off)
o Recorded to the wrong accounts (Classification)
o Not recorded at all (Completeness)
This assertion is addressed by this control: Confirming with account owners that all entries have been submitted and posted
What is Completeness.
Testing the OE of controls around JEs closer to this date will provide the most sufficient audit evidence.
What is the balance sheet date?