Entries posted after the period has closed, and adjustments made outside the ledger altogether, are where management has the most room to shape the numbers and the auditor has the least automatic visibility. They deserve their own line in the audit plan, not a filter buried in a journal entry script.
Last reviewed: 17 October 2026. Facts checked. We opened a web search on journal entry testing under ISA 240 and found commentary noting that the UK version of the standard extends selection of journals to post-closing entries; we could not confirm the equivalent wording in the ICAI text of SA 240, so check it before quoting. We did not open the ICAI standard or the Companies Act provisions on books of account. The examples are invented and carry no thresholds.
Two different things with one nickname
Post-closing entries are posted in the ledger after the period-end date has passed, often during the audit. A March year-end entry posted in May is the typical case.
Top-side adjustments never enter the ledger. They are made on a spreadsheet or in a consolidation tool on top of the trial balance, to arrive at the financial statements. Group reporting packs, reclassifications into Schedule III captions and last-minute provisions often travel this route.
Both can be entirely legitimate. A deferred tax true-up or an audit adjustment agreed with the auditor is normal. The risk is that they sit away from the controls that govern day-to-day posting: no approval workflow, no user restrictions, and sometimes no trail.
Why they matter
SA 240 asks the auditor to test journal entries and "other adjustments" made in preparing the financial statements, regardless of the assessed risk of management override. That second phrase is the top-side category. Management override is listed in the standard as a risk that is present in every entity because management can manipulate records by posting inappropriate entries or adjusting amounts outside the normal process. It is a presumed risk, not one the auditor can rule out by being comfortable with the client.
What to ask for
Build a request list that does not rely on the client volunteering anything.
- The bridge from ledger to financial statements. A schedule showing each line of the final financial statements, the trial balance amount behind it and every adjustment between the two.
- All entries dated after period end. Not "late entries the client considers significant" but the full list by posting date, with the user and the document or voucher number.
- The period-close timetable. When was the ledger locked, who can reopen a period, and was it reopened? Reopening is itself something to ask about.
- Consolidation and reclassification workings. In group settings, the eliminating entries and any manual adjustments by the parent.
- The list of users with the ability to post after close. In SAP-type systems this is a role question; in Tally it is a security-control question.
- Management's own summary of unadjusted differences. Compare it with yours.
For the data side, see our guide to reconciling a journal export to the trial balance.
How to test them
For each post-closing or top-side entry selected:
- Purpose. Ask preparers and approvers why it was made. Inquiry is a required part of the work, but the answer is a lead, not evidence.
- Support. Trace to an external or independent document: a contract, a confirmation, a subsequent receipt, a valuation report, a board minute.
- Approval. Who authorised it, and was that person senior enough and independent of the preparer? Is the approval dated before or after the entry?
- Timing logic. If the entry reflects events after the balance sheet date, does it belong in the current period (adjusting event) or the next (non-adjusting)? Consider the standards on events after the reporting period.
- Direction. Does it improve profit, a covenant ratio or a bonus metric? Count the entries by direction. A set that pushes consistently one way is more informative than any single entry.
- Reversal. Is the entry reversed in the next period? A provision that appears in March and vanishes in April deserves a conversation.
Questions that surface problems
- "Which entries did you make after the first draft of the accounts?" Drafts are datable; ask for the first and last versions and compare.
- "Were any entries made at the request of someone outside accounts, such as the promoter, the lender or the group?" Pressure to reach a target is a classic driver.
- "What changed between the trial balance you gave us at fieldwork start and today?"
Record answers, then check them against data. If the data disagrees with the answer, that is the finding.
A worked example (invented)
During fieldwork, a company's draft profit is below the figure a lender expects. Between the first and second trial balance, two changes appear: a provision for doubtful debts is reduced and a repair expense is reclassified to capital work in progress. Both are posted in a spreadsheet adjustment, not in the ledger, and both are approved by the same finance head who prepared them.
Numbers are omitted on purpose. The signal is not the size. It is that two top-side adjustments, outside the controls, with a single person on both sides, move in the same direction and coincide with a lender expectation. The auditor requests ageing and recovery evidence for the provision and the work orders for the repair, and treats the result as a candidate misstatement. This is an invented case for illustration.
Documentation and escalation
Keep a log of all post-closing and top-side entries, tested or not, with the reason selected or excluded. If entries cannot be supported, consider the effect on the audit opinion and whether the matter belongs in communication with those charged with governance. If fraud is suspected, the standard's requirements on communication and, in India, reporting under the Companies Act may apply; take the wording from the official texts.
The takeaway
Normal postings have controls around them. These entries often do not. Ask for them by name, test them on support and direction rather than size alone, and always compare the first set of numbers with the last.
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