Manual Journal Entry Control: Approval, Support and Fraud-Red-Flag Checklist
Manual journal entries are powerful because they bypass sub-ledgers. They need strong support, approval and review, especially near month-end and year-end.
Detailed analysis
Manual JEs are necessary for accruals, provisions, reclassifications and corrections. But they also create fraud and error risk if posted without source documents, reviewer approval or reversal logic.
Practical example
A ₹30 lakh revenue adjustment is posted on 31 March with narration 'management entry'. Controller blocks it until contract support, revenue memo, CFO approval and auditor-ready schedule are attached.
Evidence and control checklist
| Area | What to check | Evidence to save |
|---|---|---|
| JE purpose | Accrual, correction, reclass, provision or consolidation. | JE request and reason code. |
| Support documents | Computation and source evidence. | Working sheet, contract, invoice or approval. |
| Approval | Maker-checker and threshold approval. | Workflow approval log. |
| Reversal | Auto/manual reversal date for accruals. | Reversal tracker and next-month entry. |
| Exception review | Round figures, late-night entries and unusual accounts. | JE analytics and reviewer comments. |
Common mistakes
- Posting JEs with vague narration.
- No attachment/support.
- Same person prepares and approves entry.
- No reversal for accruals.
- Not reviewing year-end manual entries separately.
Official reference framework
Based only on official India Code, MCA and ICAI source pages listed below. Check the latest Companies Act, Schedule III, accounting standards, Ind AS/AS applicability and auditor guidance before closing or filing.
Official sources used
This article is intentionally source-limited to official India Code, MCA and ICAI material. Source validation date: 17 June 2026. Verify final positions with latest Companies Act, Schedule III, accounting standards, Ind AS/AS applicability and auditor guidance before closing or filing.
- India Code: Companies Act, 2013 Section 128 - Books of account
- ICAI: Engagement and Quality Control Standards - Complete Text
- ICAI: Guidance Notes on Auditing Aspects
FAQs
They can override normal transaction controls.
Computation, source documents and approval.
Yes, with threshold-based reviewer control.
Round figures, late postings, unusual accounts and missing support.
Controller/finance head and audit team where applicable.
Source and review trail
Use the current official instrument, portal or regulator publication before acting. This panel separates the category authority from page-specific references.
- Primary category
- Accounting, Audit & Ind AS
- Official starting point
- www.icai.org