Review and approval of Journal Entry 2831

  • Hi, I’m new in SOX work. Hope you can help me .
    Background:The company I’m working with has been a SOX compliant for 6 years now.
    One of the key controls is JE entry must be reviewed and approved by the authorized personnel.
    The review and approval is performed by the Junior accounting Manager (JAM)and Senior Accounting Manager(SAM), respectively. The scenario here is that the Senior accounting Manager can’t approve the JV on or before cut-off period due to voluminous transactions and major responsibilities. I’m looking at possible risk that if JE is not approved on time unauthorized entries might be included in the financial statement which will result to financial misstatement.

    1. Is review personnel and approval personnel has to be in diff. position? Can we make it as reviewed and/or approved by the JAM/SAM? so that if it’s already reviewed by the JAM it is good as approve. Am I violating the SOD principle with this one?
    2. Or what if we set JE amount limits to JAM(immaterial JE amounts) where he’ll be authorized to review and approve to lessen the volume SAM has to approve. Again, Is this a violation of SOD principle?.
      Thanks in advance.

  • It can be reviewed and approved by the same person, as long as that person isn’t also the one who prepared it.

  • I agree with risys82, as you need checks-and-balances in the process, so that one person does not have start to finish capabilities to generate fictious transactions.
    SOX does not specifically dictate absolute approaches for these situations. However, based on any risks foreseen, automony levels could be set for items over a certain threshold (USD100,000 for example) the JAM could get approval from the SAM.

  • Thanks risys82 and harrywaldron. 🙂
    I’m sure now what to recommend for the enhancement of our company’s internal control.
    Hope to hear from you again.

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