Overview
The Audit Sight Journal Entry Module is designed to help identify potential fraud by highlighting unusual journal entry patterns related to revenue and expenses. To determine what is unusual, the system first establishes what is expected.
Audit Sight uses a rules-based engine to define expected journal entry behavior by identifying common and appropriate account offsets to revenue and expense accounts. These default expectations reflect standard accounting practices and serve as the baseline for analysis.
At any point, users can override or modify these expectations to align with the specific facts and circumstances of an engagement.
This article outlines the default journal entry offsets that Audit Sight classifies as expected for both revenue and expense testing.
How It Works
When the Journal Entry Module is requested, revenue and expense accounts are automatically classified as Expected or Unexpected based on predefined rules. These default classifications—and the underlying logic—are summarized in the tables below.
After the workpaper is generated, users can update these classifications directly within the Audit Sight user interface. Any changes made will automatically refresh the workpaper to reflect the revised scoping and testing population.
Revenue Expected Account Default Mapping
For Revenue journal entries, the accounts listed below are classified as Expected by default. Any Revenue accounts not included in this list are automatically treated as Unexpected.
These default classifications can be overridden by the user at any time. When updates are made, the workpaper will automatically refresh to reflect the revised scoping.
| Account | Reason Revenue is Expected |
|---|---|
Asset:current:cashOr asset:current:cashNonBankAccounts | Immediate payment for goods or services results in cash being the offset to revenue. |
asset:current:undepositedFunds | Holds customer payments temporarily before deposit; revenue is recorded when payment is received. |
asset:current:accountsReceivable | Sales made on credit record an offset to accounts receivable until payment is collected. |
liability:current:salesTax | Sales tax collected from customers is recorded with revenue, but credited to a liability. |
liability:current:other:deferredRevenue | Represents payment received in advance; recognized as revenue when earned. |
liability:current:other:customerDeposits | Advance payments from customers; recognized as revenue upon delivery of goods/services. → Deferred Revenue |
liability:current:other:billingsInExcessOfCost | Amounts invoiced before costs are incurred; reduced and recognized as revenue as project progresses. |
Expense Expected Account Default Mapping
For Expense journal entries, the accounts listed below are classified as Expected by default. Any Expense accounts not included in this list are automatically treated as Unexpected.
These default classifications can be overridden by the user at any time. When updates are made, the workpaper will automatically refresh to reflect the revised scoping.
| Account | Reason Expense is Expected |
|---|---|
asset:current:accountsReceivable:allowanceforDoubtfulAccounts | Bad debt expense is recorded when adjusting the allowance for uncollectible accounts. |
asset:current:inventory | Inventory write-downs or adjustments flow through cost of goods sold or other expense accounts. |
asset:current:prepaidExpenses | Expense recognition occurs as prepaid costs are amortized over time. |
asset:nonCurrent:fixed or asset:nonCurrent:fixed:accumulatedDepreciation | Depreciation, impairment, or disposal losses on fixed assets result in expense entries. |
asset:nonCurrent:intangibles or asset:nonCurrent:goodwill | Amortization of intangibles or goodwill result in expense entries. |
liability:current:accountsPayable | Payment or accrual of vendor invoices typically results in expense recognition. |
liability:current:creditCardPayable | Credit card charges often relate to operating expenses and are accrued to this account. |
liability:current:payrollLiability | Payroll-related expenses (wages, benefits, taxes) are accrued in this account before payment. |
liability:current:tax | Accrued tax expenses (e.g., income tax, property tax) are recognized here before payment. |
liability:current:other:accrued | General accrued expenses, such as utilities or professional fees, are recorded here before invoicing or payment. |
liability:noncurrent:tax | Long-term tax liabilities may be recognized through deferred tax expense. |
Final Notes and Best Practices
Changes to Revenue and Expense accounts mapping can be made at any time. Once updates are made a Journal Entry Testing workpaper will auto generated.
