Journal Entry

Your audit prep turned up 47 manual journal entries in Q3 with no supporting documentation and no approval signatures. The auditors want an explanation for each one, and your team doesn't have one. A journal entry is the basic recording mechanism in double-entry bookkeeping: a dated record of one or more debit and credit postings to GL accounts, with equal totals on each side. System-generated journal entries handle most routine transactions. When a customer pays an invoice, the accounting system creates the debit to cash and the credit to accounts receivable with no one touching it. Manual journal entries are different. Accountants create them to record transactions or adjustments the system can't automate: period-end accruals, allocations, corrections, and estimates. Manual journal entries are necessary and high-risk at the same time. They are necessary because not every financial event flows through a structured workflow the system can process. They are high-risk because they can be used to manipulate reported results, they require judgment about amounts and timing, and their accuracy depends entirely on the preparer's competence and intent. The 47 undocumented entries are more than an audit problem. They show that journal entry controls broke down at some point.

How it works

Standard journal entries are recurring and often system-generated: depreciation entries calculated from the fixed asset schedule, revenue recognition entries generated by the billing platform, payroll entries imported from the payroll system. They are low-risk because the source sits outside the accountant, the amounts come from a defined calculation, and the posting repeats. Adjusting journal entries are different. They record accruals, reversals, reclassifications, and estimates, all of which require judgment. The year-end bonus accrual is an estimate. The bad debt reserve adjustment is an estimate. A reclass from one expense account to another corrects a prior posting error but has no external source document anyone can independently verify. That is why auditors focus so heavily on manual journal entries in financial statement audits. Research on financial fraud consistently shows that earnings manipulation is carried out through journal entries, typically small, non-recurring entries posted late in the period by senior finance staff who have both access and authority. The controls around manual JEs are therefore a central part of the overall internal control structure. The minimum requirements: documented support for every JE at the time of posting, approval by someone other than the preparer, and a periodic review of all manual JEs by the controller or CFO.

Recurring JEs, adjusting entries

Manual journal entries don't all carry the same risk. Recurring journal entries, which repeat every period with the same or nearly the same amounts, include rent accruals, depreciation, and intercompany allocations. These can often be set up as standing entries that auto-post each period, which cuts manual handling and the errors that come with it. Support for a recurring JE is the initial setup documentation plus a periodic check that the amount is still correct. Adjusting journal entries (one-time or period-specific) carry more risk because their amounts need fresh judgment each period. They include accruals for invoices not yet received, adjustments to estimates (bad debt reserve, warranty reserve), and corrections to prior postings. Support for adjusting JEs should be specific to the period. For an accrual, that means evidence the expense was incurred (a contract, a PO, a rate card) and the calculation behind the estimated amount. Reversing entries, which automatically unwind an accrual in the next period, reduce the risk of accruals piling up and double-counting, but they have to be set up correctly and checked when the actual transaction posts. A well-designed accrual and reversal workflow plus mandatory JE support at posting time is the baseline control standard.

How JE approval workflows work in different platforms

JE approval workflows range from non-existent (anyone with GL access can post) to fully configured multi-level routing based on amount thresholds and account types. The minimum acceptable control is a two-person rule: the preparer submits, a reviewer approves, and no one can approve their own entries, nor can someone with less authority than the preparer approve them. Stronger workflows add amount-based routing (entries over $50K need controller approval, over $200K need the CFO), account-based routing (entries touching revenue accounts trigger a separate review), and separation of preparation and posting access (the preparer can create and submit but not post; only the approver can post). What the audit trail captures matters as much as the approval workflow. The system should log who created the JE and when, what the original entry contained, who approved it and when, any changes made between creation and posting, and when it posted. If a JE is changed after approval (which should itself require re-approval), that change must appear in the log. The practical test during vendor evaluation: pull up the change history of a journal entry that was modified after initial submission. Does the system show the original entry, the modification, who made it, and whether re-approval was obtained?

Five questions to ask vendors about journal entry controls

• Can you configure JE approval routing on both amount threshold and account type, for example requiring CFO approval for all revenue account entries above $10K regardless of the total JE amount?
• Does the system prevent a JE preparer from also approving their own entry, and is this enforced at the role/permission level rather than depending on user discipline?
• If a JE is modified after it has been approved, does it require re-approval or can the modification post without returning to the approval workflow?
• What does the full audit trail for a journal entry include: user IDs, timestamps, original vs modified amounts, and approval actions?
• Can the system produce a report of all manual journal entries for a period, filtered by preparer, account, or amount, in a format auditors can review without manual export clean-up?

Common mistakes

The first is letting anyone with GL access post JEs without review. In small finance teams, one or two people often have full GL access and no approval workflow configured, because it seemed like unnecessary overhead when the team was small. As the company and its transaction volume grow, the missing JE approval workflow becomes a material weakness: there is no independent check on manual postings, which is exactly the control auditors test. Fixing it after the fact means configuring the workflow, training the team, and documenting the change while keeping the close on schedule. The second failure is not attaching support at the time of posting. Documentation added later, especially during audit prep, is weaker than contemporaneous support. Auditors note when support was created relative to the entry date, and support packages assembled weeks after the JE posted get the skepticism they deserve. Attaching support before or at posting has to be built into the close process explicitly.

Accounting entry, not a diary

Search results for this phrase mix two unrelated things: the accounting record described here, and journalling as a writing habit. In accounting, a journal entry is a dated posting with a debit side, a credit side, an amount, an account for each side, and a description that explains why it exists. Review and approval of manual entries is a standard control, because manual journals are where period-end adjustments and errors both live.

Comparing accounting software

The dividing line in this category is whether a tool owns the ledger or sits beside it running reconciliations and the close checklist. Once journal entry is settled as a requirement, read the Accounting Software category guide for how the market splits, then weigh the BlackLine profile against the FloQast profile on that requirement rather than on the feature list. Our BlackLine pricing breakdown records what the vendor publishes and what is quote-based. The BlackLine against FloQast comparison sets two of them side by side on the same criteria. Before you book demos, put your own numbers through the accounting software ROI calculator so the business case is written down before a vendor writes it for you.

Journal Entry questions

Related terms

Account Reconciliation, Accrual Accounting, and Audit Trail come up in the same workflow as journal entry, and the rest of the accounting software cluster is indexed in the finance operations glossary.