Journal Approval

An accountant drafts a manual entry to accrue an unpaid expense, and a reviewer checks the invoice or estimate, account coding and period before the entry affects the general ledger. The control is most useful when the review is real and traceable.

Oracle's PeopleSoft documentation describes an approval workflow that prevents posting while approval is still required, though other systems may use a different sequence, so the exact control design must match the accounting platform. The PCAOB's journal-entry audit focus discusses risks around journal entries and management override.

That audit guidance is not a universal requirement to approve every entry, but it explains why unusual postings deserve scrutiny. Define which journals require review: manual entries, late adjustments, high values, sensitive accounts and entries from privileged users often warrant attention, while routine automated feeds may use different controls.

Set thresholds with care, because a high threshold can let many small errors through and a low threshold can overwhelm approvers, so risk, not amount alone, should shape the policy. The reviewer should check the business reason, since an entry moving a balance from expense to asset needs a clear explanation and evidence, and "month-end adjustment" is not enough.

Debits and credits should reconcile, but a balanced entry can still be wrong if accounts, dates or amounts are inappropriate, and a valid invoice posted to the wrong month distorts results, so cutoffs and any prior-period correction need review. Agreements, invoices, reconciliations or calculation workpapers should connect to the entry, and an attachment filename alone is not proof the reviewer read it.

Separate preparation and approval where practical, because self-approval undermines an independent check, and if a small team cannot separate roles, arrange owner or external review of higher-risk journals. Limit access too, since users who can create, approve and post without oversight present a risk, so review permissions and emergency override logs.

Record the approval date, reviewer, comments and version to support an audit trail, and if the entry changes materially after approval it may need review again. An approver should be able to reject or return incomplete entries rather than accept a weak entry to meet a deadline, and urgency should be handled through an authorised exception path with prompt independent follow-up rather than a quiet bypass.

An illustrative approval compliance measure is journals requiring approval that received documented valid review divided by all journals requiring it, so if 98 of 100 meet the rule, compliance is 98%, not proof that 98 entries are correct. Sample the quality of review, because a string of one-click approvals within seconds might satisfy a workflow field while failing the purpose, and reconcile bank, receivable, payable and other accounts afterwards, since controls work in layers.

Watch recurring reversals, which should be linked to the original accrual with visible timing and rationale, check for duplicate entries booked by different preparers from different source files, and review management journals because senior staff can override systems or influence approvers. Train reviewers on account purpose and escalate specialist matters such as an unusual lease or tax entry, because for owners journal approval creates a pause before financial records change, and it works when risk-based scope, supporting evidence and independent judgment are visible.