Proactive Journal Entry Testing - A Must For Auditors

When looking at some of the recent large-scale frauds, such as WorldCom, management override around the journal entry process was the key contributing factor (according to an Oct. 30, 2002 article in The Wall Street Journal). This is to be expected because the easiest route to changing the books and records is for executive management to post a top-side journal entry.
Audit Standard #99 makes specific references to using data analysis to support the audit process and AICPA Practice Alert 2003-02 provides specific guidance on journal entry tests that should be performed on every audit. As much as possible, these reports should be automated (vs. having someone manually scan general ledgers).

See my website, AuditSoftware.Net for a comprehensive list of automated journal entry tests.