How do you perform journal entry testing?
A core Audit & Assurance interview question — asked in analyst and associate interviews across IB, PE, and the Big 4.
THE SHORT ANSWER
ISA 240 response to management override. Steps: (1) Obtain complete GL population, (2) Filter for risk characteristics: entries by senior management, weekend/holiday entries, round numbers, unusual account combinations, (3) Select and test: vouch to supporting documentation, assess business purpose. One fraudulent entry is a significant matter.
WHAT INTERVIEWERS LISTEN FOR
- ✓Obtain complete GL population
- ✓Filter for risk characteristics
- ✓Select and test entries
- ✓Assess business purpose
- ✓One fraudulent entry is significant
COMMON MISTAKES
- ✗Testing only a random sample without risk filtering
- ✗Ignoring management override risk
- ✗Not vouching to supporting documentation
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