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What is the Journal Entry Module?

The Journal Entry Module is a powerful tool designed to streamline and enhance the testing of journal entries during audits. Journal entry testing is required as part of SAS 99. With our module, auditors can identify potential anomalies, such as unusual transactions in revenue and expenses, while ensuring data completeness and accuracy with the underlying general ledger.

How Does It Work?

The Journal Entry Module analyzes accounting data to identify irregularities and potential risks. By leveraging automation, it performs tests like completeness checks and unusual revenue or expense detection. Before the data is processed, Audit Sight automatically identifies reversing journal entries and splits batch entries into smaller entries based on dollar amounts and account combinations, creating greater transparency in your client’s data.

General Information

What Data Is Required for the Journal Entry Module?

If your clients connect their accounting system, you're all set—no additional data is needed!

If connecting isn’t an option, the following reports are required:

• General Ledger Report: Detailed transactional data from the accounting system.
• Comparative Trial Balance: Includes prior period balances for completeness checks.

Note: If the general ledger includes starting and ending balances, the comparative trial balance may not be necessary.

What Tests Are Offered in the Module?

The Journal Entry Module provides the following tests:

1. Completeness Testing: Verifies that all entries from the general ledger are included and none are missing. This is a required test in every audit.
2. Unusual Revenue: Detects revenue transactions with irregular patterns or account pairings.
3. Unusual Expenses: Flags unusual expense transactions based on account behavior or unexpected offsets.

What Makes Journal Entry Testing at Audit Sight Unique?

Audit Sight’s Journal Entry Module stands out by combining robust automation with precision testing. Key benefits include:

• Advanced data healing and conversion services to accommodate any general ledger format.
• Sophisticated algorithms for detecting anomalies, split batch transactions, repeated journal combinations, and auto-identification of reversing entries.
• Detailed completeness testing ensures no gaps in the data.

How Is the Journal Entry Completeness Test Performed?

The completeness test reconciles transactional data in the general ledger with the balances in the comparative trial balance. It ensures that all journal entries recorded in the accounting system are captured and accounted for without omissions.
Specifically, for each account listed on the trial balance, an expectation is set:

• Balance Sheet Accounts: The change in the account per the trial balance should equal the activity in the general ledger.
• Income Statement Accounts: The balance for the current year should equal the activity in the general ledger.

What Are Journal Entry Combinations?

Journal entry combinations refer to journal entries that share the same account combinations in the same debit and credit amounts.
For example:

• Debit AR, Credit Revenue = 1 combination
• Debit Revenue, Credit AR = Another combination

Every journal entry in the population is assigned a combination ID, which is included in our standard reports.

What Are Journal Entry Splits?

Batch journal entries have plagued auditors for years! A batch entry is one journal entry that serves multiple purposes. Audit Sight has built an algorithm that splits a single journal entry into multiple, bite-sized entries. Based on these split journal entries, our anomaly detection works effectively.

What Are Reversing Journal Entries?

Reversing entries are adjustments made to undo or reverse previous journal entries. When the original journal entry and the reversing journal entry are matched, they have zero net impact on the financial statements. Audit Sight automatically identifies these entries when they are made on the same day or one day apart.

Data Healing and Formatting

What General Ledger Formats Do You Support?

Audit Sight supports all general ledger formats as long as the data is provided in CSV, Excel, or text. We also have over 30 system guides with step-by-step instructions on how your clients can export the general ledger. Some PDF ledgers are also acceptable.

What Happens If the General Ledger Doesn't Have a Journal Entry or Transaction ID?

If transaction IDs are not available, the module uses other unique identifiers, such as dates, descriptions, and account combinations, to create journal entry and transaction IDs.

What Happens If the Journal Entry Is Recorded Over Multiple Days?

The module accommodates entries recorded over multiple days by breaking the entry apart into multiple distinct entries. If the entries do not balance, the Audit Sight Clearing Account is used to account for the timing difference.

What Happens If I Can Only Get a Created Date and Not the Posted Date?

The module uses the posted date for analysis since it represents when the transaction affects the ledger. If only the created date is available, the created date will be used unless it is outside of the accounting period (i.e., the period under audit). In such cases, the date will automatically update to either the first or last day of the accounting period, depending on whether the entry is dated before or after the period.

What Is the Audit Sight Clearing Account?

The clearing account is a placeholder account used by Audit Sight to track journal entries that have multiple posted dates. These placeholder accounts ensure monthly reporting is accurate while having zero impact on the total results.

What Is the Audit Sight Historical Variance?

The historical variance account represents an unbalanced beginning trial balance. Often, this is prior-year net income or current year-to-date income for the company.

Other Information

What If I Need Help Troubleshooting an Issue With Cash Proof?

If you encounter any issues or need assistance, our support team is here to help. You can contact your account manager directly or reach us through our support portal or via email at support@auditsight.com.