Journal entry testing on a whole population
How an audit team loads a full journal extract into Achekam, which unusual entries are flagged for testing, and what is kept of the file afterwards.
By Achekam · · 4 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
The journal that matters is rarely the one in the sample. It is the entry posted late on a Sunday by a user who normally never posts, crediting revenue and debiting a suspense account, then reversed quietly after the year-end. ISA 240 treats management override of controls as a risk on every audit for exactly this reason, and it requires the auditor to test the appropriateness of journal entries and other adjustments. The IAASB's page on ISA 240 (Revised) describes the revised standard, which clarifies the auditor's responsibilities relating to fraud and strengthens the response to fraud risks.
Testing journals properly means looking at all of them, not a handful chosen at random. This article explains how an audit team loads a whole-population journal extract into Achekam, what gets flagged, how the selected entries are tested and recorded, and what Achekam keeps of the extract.
Start with a complete extract
Under Audit & Assurance, Journal Entry Testing, staff load the client's journal extract as a CSV file covering the whole population for the period.
The quality of the test depends on the extract, so get the request right. Ask the client's IT or finance team for every journal line for the period, with posting date, entry date and time where the system records it, user, source, accounts, description and amount. Then, before you load it, agree the extract to the trial balance: the movements in the extract should account for the change in each account between opening and closing balances. If they do not, the extract is incomplete, and no amount of clever filtering will find an entry that is not there.
Map the columns
Every accounting package exports journals differently. Once the CSV is loaded, staff map its columns: which column is the date, which the user, which the amount, and so on. Take care over the date and time columns in particular, because several of the flags depend on them. A package that exports the posting date but not the time of entry cannot tell you which entries were posted after hours, and the working paper should say so rather than imply the test was done.
The entries Achekam flags
Achekam flags entries such as:
- Manual postings, as opposed to those generated by a subledger.
- Weekend postings.
- After-hours postings.
- Post-close postings, made after the period was closed.
They sit alongside the characteristics described in the application material to ISA 240, such as entries made by people who do not usually post journals, entries to unrelated, unusual or seldom-used accounts, and entries made at the end of the period or as post-closing entries. Staff then select entries from the flagged population and test them.
A worked example in words: the flags show a small group of manual entries posted on a weekend just after the year-end close, all by the financial director, all crediting revenue. The team selects all of them, obtains the supporting documents and explanations, and finds that one is a legitimate correction while the others reverse sales recorded in the last week of the year. That finding then drives work on cut-off and on revenue as a whole.
Selecting by criteria is different from statistical sampling. Where the team also wants a random element, for example a selection from the unflagged remainder, the sampling route in Audit Intelligence applies, with its reviewer approval and stored seed; see audit samples a reviewer approves before drawing.
What Achekam keeps, and what it does not
The CSV itself is not stored. What Achekam keeps is the file's hash and its row count.
That has a practical consequence. The hash lets you show later that the extract you hold is the one that was tested, but only if you hold it. Keep the original extract with the audit evidence, for example in the client's folder in the Document Centre vault, so that the hash can be checked against it.
One label to ignore: the "Halo-Style" badge on the screen is only a label. Describe the work in your file as what it is, journal entry testing on the loaded population with the criteria you applied.
Recording the results
Results belong in the working papers. Findings can be raised from a working paper and later closed or withdrawn. If testing leads to an audit adjustment, it is recorded on the affected line in the Lead schedules tab with a reason. The Adjustments entry in the audit menu does not open its own screen, so go to the Lead schedules tab under Audit Procedures, Fieldwork.
The working paper for journal testing should set out the extract and how it was reconciled, the column mapping, the criteria applied, the entries selected and why, the results of each test and the conclusion. If your criteria went beyond the four flags above, for example entries to seldom-used accounts or with round amounts, say how you applied them.
A journal testing checklist
- Request a full-period extract with user, date, time and source fields.
- Agree the extract to the trial balance movements before loading.
- Map the columns, noting any field the client's system does not provide.
- Review the manual, weekend, after-hours and post-close flags with the engagement risks in mind.
- Select entries and test them against supporting evidence and explanations.
- Keep the original extract with the audit evidence so its hash can be checked.
- Record findings and any adjustment on the working paper and the lead schedule.
The materiality approved for the audit, covered in setting and approving materiality, still governs how you evaluate any misstatement that the journal testing finds.
Before the next fieldwork visit
Send the journal extract request to your client at planning, not at final fieldwork. Getting the extract early gives you time to reconcile it, and a client that struggles to produce a complete extract is telling you something about its controls.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
