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Scrutinizing manual journal entries

One significant source of wasted effort in finance departments is the performance of journal entries when systems are capable of entering them automatically. An audit client might know that, say, 60% of its journal entries are manual but it might need insight on which entries could be automated.

Whole ledger analytics provides the capability to identify which journal entries are done manually, which are automated, and how many manual journal entries each employee is performing.

“Accountants are great about wanting metrics, but they typically don’t have enough metrics about their own activity,” Howell said. “The key is giving them opportunities that they can work on in bite-sized chunks.”

For example, because fixed assets is a common module across most major enterprise resource planning systems, it would be reasonable to anticipate that the integration between the fixed asset module and the general ledger would result in all depreciation expenses being recorded in an automated fashion throughout the year. Whole ledger analytics can quickly show which of those entries are not automated, as well as who made the manual entries.

When audit clients can decrease their number of manual entries, they create opportunities to reduce headcount or provide staff opportunities to perform more valuable tasks. It may also increase satisfaction among staff who don’t enjoy the tedious job of booking manual entries.

“If you've got people that are being paid a high salary and they book 1,000 entries a year, is that really what you want them doing in today's work environment?” Howell asked. “How much longer are they going to tolerate the job, right? They want to be doing higher value-added things.”

Other applications

Whole ledger analytics also can be used to:

Discover duplicate payments. In a large and complex organization, the risk of duplicate payments to vendors — even if inadvertent — is very real. Whole ledger analytics can help the organization discover duplicate payments. Duplicate payment tests can search for variations of the vendor number, invoice number, invoice date and invoice amount fields. While this is not a preventive control, it can lead to cost recovery, and sometimes the duplicate amounts can be substantial.

Reveal efficiencies that can shorten the close process. Whole ledger analytics can provide a detailed analysis of when entries were booked after a closing period. This analysis can be compared with the close calendar to see which functions were late booking entries and which entries were early or on time.

Identify unusual accounts or entries. One feature of whole ledger analytics enables auditors to gain a different perspective based on examining combinations of accounts.

“This extra value-add is actionable information,” Howell said. “These analytics provide audit clients with bite-sized chunks of issues they can work on and then track over time because dashboards can be built in so there’s no extra work involved for them.”