A solution checklist for manual journals
The expectation is that you properly unify your systems and properly interface them so that the need for manual journals is completely or almost completely eliminated.
Manual journals speak to a lack of integration among ones’ systems or perhaps a failure in the good and proper accounting bookkeeping and accounting process but the reality is that there are certain circumstances under which the creation of a manual journal is simply a necessity even if you have a good systems architecture.
What is probably more important, is exposing the entire business and business partners as well as the audit team, to the events that drive the creation of the manual journals and what systems and processes you can put in place to either constrain their use or minimize their application.
Some of the kinds of manual journals that get created in the normal course of business include suspense, recurring, allocation, budget, standard, reversal, statistical, formula, encumbrance and tax journals but if you have to create manual journals what should you look for in a system that supports you being able to create journals in a controlled way?
During the course of working with customers, partners, consultants and software engineers on a product specifically targeted at the manual Journal Entry process I determined some aspects that those who were involved felt were important.
Here’s a starter set of requirements for an automated journal entry solution – things that I believe it should at least include:
- Easy creation of data in an environment that bookkeepers and accountants are comfortable with – often this is Excel
- Integration of basic as well as customized general ledger data validations and easy identification of issues
- An ability to handle journal entries with one to one, one to many and many to many account relationships
- Document Attachment handling and supporting document management
- Handling large documents (>999 lines in SAP)
- Comprehensive auditable logs that demonstrate who started a process, who participated and who finalized the postings
- Functionality to identify the associated IT document in the system associated with the journal entry together with the source of the entry (eg Excel data workbook)
- Flexible workflow options
- An ability to handle all the different types of manual journal entries that organizations might need to make
- Support for cross company postings and limits based on materiality rules
- Reporting, and the ability to support KPI management for the finance function without needing to always go to the system of record for identifying process activity
In the pursuit of the ‘first time correct’ manual journal organizations needs to have a robust and reliable automation solution that not only achieves the manual journal objectives of all the different types of manual journals one would like to create but which also supports the policies and controls that the business needs in order to assure correct and proper accounting records.
Can you think of any others?
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