Manual journals are the one place where a single person can change the numbers without a document behind it.
Every manual journal should have supporting evidence attached, be approved by someone other than the person who prepared it, and be posted before the period is locked. Review a report of all journals posted after the cut-off, by unusual users or for round amounts, and keep recurring journals on templates so they are not rebuilt from scratch.
System entries come from invoices, receipts and payroll. Manual journals come from a person's judgement, often under deadline pressure, and they can move any balance. That makes them the usual route for both honest errors and deliberate misstatement, which is why auditors are required to test them for management override.
Once a month, pull a list of every manual journal and look for:
Most will have a good explanation. The point is that somebody asked.
If one person prepares and posts almost every journal, have the finance director or an owner review the monthly journal listing and sign it. It takes twenty minutes and closes the biggest gap in a small finance function. See month-end close controls.
Auditors in both countries must test journal entries under the auditing standards on fraud: ISA (UK) 240 in the UK and AU-C 240 or AS 2401 in the US. US public companies also need documented evidence that journal approval controls operated all year for Sarbanes-Oxley.
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Not one by one. The control sits on the system and its settings. What needs approval is any manual entry, including manual adjustments to system-generated entries.
Enough for a reviewer to recalculate the entry and agree it to a source: a schedule with its inputs, an invoice, a contract or a reconciliation.
Before, wherever your system allows it, so an error never reaches the ledger. If your system only supports approval after posting, review and sign the journal listing before the period is closed so errors can still be reversed in the same period.
An adjustment made at consolidation or reporting level rather than in an entity's ledger. Because it bypasses the entity's own books, it needs the same support and independent approval as any manual journal, and a clear trail back to the entity accounts.
All manual journals should appear on the listing. Investigate every one that meets a risk criterion, such as posted late or a round amount, and sample the rest.
Last updated 18 October 2026. General guidance for finance teams; check it against your own policies, systems and local rules.