Journal Entry Testing Working Paper — SA 240
JOURNAL ENTRY TESTING — SA 240 WORKING PAPER
Entity: {{client_name}} · Year ended: {{period_end}} · Prepared by: __________ · Reviewed by: __________
Purpose: document the testing of journal entries and other adjustments for evidence of management override of controls, as required by SA 240 (The Auditor’s Responsibilities Relating to Fraud), including the mandatory procedures in para 32(a).
Part A — Population and scope
| Particulars | Details |
|---|
| Total journal entries in the period | |
| Source of population (ERP / ledger export) | |
| Period covered (incl. post-close entries to date of report) | |
| Entries posted to the general ledger at or near period end | |
| Users authorised to post manual journal entries | |
| System-generated vs user-posted split | |
Part B — Benford’s Law leading-digit profile
Profile the leading digit of every journal amount against Benford’s expected distribution. Investigate digits deviating materially — deviation is a screen, not a conclusion.
| Leading digit | Expected % | Actual % | Deviation | Investigated? (WP ref) |
|---|
| 1 | 30.1% | | | |
| 2 | 17.6% | | | |
| 3 | 12.5% | | | |
| 4 | 9.7% | | | |
| 5 | 7.9% | | | |
| 6 | 6.7% | | | |
| 7 | 5.8% | | | |
| 8 | 5.1% | | | |
| 9 | 4.6% | | | |
Part C — Characteristics battery
Screen every entry for the classic override characteristics. Record the count flagged, the count examined, and the conclusion per characteristic.
| Characteristic | Flagged | Examined | Exceptions | WP ref |
|---|
| Round-amount entries (e.g. multiples of ₹1,00,000) | | | | |
| Entries posted at or near period end | | | | |
| Entries posted after close (pre-report) | | | | |
| Weekend / holiday postings | | | | |
| Unbalanced or one-sided entries | | | | |
| Bank / cash movements routed through journal vouchers | | | | |
| Entries between seldom-used account pairings | | | | |
| Reversals shortly after period end | | | | |
| Duplicate entries (same amount, parties, date window) | | | | |
| Entries posted by senior management or unusual users | | | | |
Part D — Items selected for detailed testing
| JE ref | Date | Amount (₹) | Ledgers affected | Reason selected | Support examined | Conclusion |
|---|
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Part E — Enquiries and other SA 240 para 32(a) procedures
- Enquiries made of individuals involved in the financial reporting process about inappropriate or unusual activity relating to journal entries
- Consideration of fraud risk indicators from the SA 315 risk assessment and the fraud-risk discussion
- Whether centralised processing or shared-service postings need separate testing
- Accounting estimates reviewed for bias (SA 240 para 32(b)) — cross-reference to the estimates working paper
- Significant transactions outside the normal course of business (SA 240 para 32(c)) — cross-reference
Conclusion
Based on the procedures above, journal entries and other adjustments [do / do not] indicate management override of controls. Exceptions carried to findings: __________ (refs).
Prepared by: __________ Date: ______ · Engagement partner review: __________ Date: ______
