Do you work in Finance? WWYD?

[LolaLolaLolas]

I've recently started work as a financial controller. Any journals that are posted have to be approved in the system before they are posted. This is new to me and is apparently due to inadequate controls being in place.

I know I need to work on improving the controls but I just wondered what other companies did and if there was a better and more fluid way of working.

Thanks!

I don't think I've seen this but if there have been mistakes in the past then it might make sense. On the basis of two sets of eyes being better than one. The kind of thing auditors might like to see.

I think this is pretty common over certain thresholds. Different levels of authority required depending on amounts.

A back up of all journals attached so the approver can glance and say yes.

The segregation of duties between preparer and approver is the control - it's not about other controls not being in place necessarily. The point is it both protects the company as far as it can from both employee fraud and employee error. It's a fundamental control that you should have in place.

This is quite a fundamental and perfectly acceptable control. Remember nick leeson?

Does it have to be someone senior who approved it or just another pair of eyes?

Yes this is standard practice where I work

Standard where I have worked recently (Sox/US listed and a large international group).

Standard practice

We had departments prepare them and get approval from the department taking on the cost.

In central finance we would check that they were moving costs that existed (right value, right codes, all the possible fields completed) descriptions were appropriate that approver was the correct person for the department and value then we would post.

I now work somewhere where our central finance function equivalent is rather lacking. Can't believe that the system reports are very accurate!!

pretty standard and basic functionality in moat finance systems with separate authority levels to write and approve journals. In smaller organisations where you can't have the same strict segregation of duties posted journals are often periodically reviewed by someone who hasn't posted them.

Auditors have always had reviews of journal postings as part of their samples and as part of reviewing adequate controls are in place.. I.e. risk of management override.