SA 240 requires the ఆడిటర్ to test journal entries with three specific risk areas: last-minute manual journals (often the final fortnight of the financial year), unusual debit-credit pairings that may signal earnings management, and related-party transaction rings. CORAA tests the complete journal universe against all three, not a sample. The SA 240 వర్కింగ్ పేపర్ documents the procedure with source వౌచర్లు attached.
Two paths to the same audit conclusion. One leaves traces; the other doesn't.
CORAA filters the journal for entries created manually (user-posted, not system-generated) within a configurable window before year-end. Default is the last 14 days. The ఆడిటర్ sees every such JE, its amount, the లెడ్జర్లు debited and credited, and the source వౌచర్.
Some లెడ్జర్ pairs are red flags: Bank debited with Revenue credited (unusual; revenue typically goes to Debtors first), Suspense లెడ్జర్ debited with Other Income credited, etc. CORAA's pairing rules flag these patterns across the complete journal.
Once the Related Party list is set in ఎంగేజ్మెంట్ సెటప్, CORAA builds a graph of transactions between related parties. Circular flows (Entity A pays B, B pays C, C pays A) surface as rings. The graph is shown in ఇంటెలిజెన్స్ స్టుడియో.
Tally and SAP both distinguish user-created journals from system-posted ones (system journals are typically depreciation, accrual reversals, etc.). CORAA reads the entry's origin and filters the journal universe accordingly.
Rules anchored to common earnings management patterns: revenue recognition shortcuts, expense deferrals, suspense లెడ్జర్ usage, late-period reclassifications. Each rule has an SA 240 paragraph reference.
ఇంటెలిజెన్స్ స్టుడియో renders the related-party transaction graph. Each related entity is a node; each transaction is an edge weighted by amount. Circular flows are highlighted automatically. Click any node to drill into transactions.
The SA 240 Working Paper documents the procedure performed: which window was tested, which rules were applied, which entries were flagged, which were dismissed with ఆడిటర్ rationale.
