Segregation of Duties for Journal Entries
Journal entry approval workflows support audit requirements by ensuring a preparer cannot also approve their own entries. Common triggers: amount threshold, account type (e.g., revenue, reserves), or adjusting entry flag.
Step 1: Define Approval Matrix
Standard entries under $X may not need approval. Adjusting entries, revenue entries, or entries above $X require manager or controller approval. Document by account type and subsidiary.
Step 2: Create Workflow on Journal Entry
Trigger on submit. Use conditions: if total debit/credit > threshold, or if "Adjusting Entry" = true, initiate approval. Optionally exclude certain accounts (e.g., accruals) or subsidiaries.
Step 3: Approver Assignment
Route to preparer's manager using a custom field or lookup. Avoid hard-coding users; use roles or supervisor hierarchy for flexibility.
Step 4: Lock After Approval
On approval, set status to "Posted" or lock the record. Prevent edits without a new approval cycle. Maintain full audit trail.
Best Practices
- Require approval for all adjusting entries at period close
- Separate standard vs. adjusting entry workflows
- Ensure approver cannot be same as preparer
YRK Consulting helps design GL workflows that meet audit and compliance requirements.