DEFINITION
Journal Entry Testing
Journal entry testing is the examination of individual general ledger postings for indicators of error, manipulation, or control failure. It targets manual entries in particular, because these bypass the validation applied to system-generated postings.
Highest-risk entries share recognisable characteristics: posted close to period end, round-sum amounts, missing or generic narratives, unusual account combinations, a preparer who rarely posts, and reversal shortly after the reporting date.
Risk rises sharply where the same user both prepared and approved the entry. Testing the full journal population and ranking by these factors directs review effort far more efficiently than sampling.