Post-Close Bill Import and Self-Approved Journal
At the March close, the Controller distributes a close package showing accounts payable of $1,240,000 and March expenses of $3,600,000. On April 8, a staff accountant imports 40 vendor bills dated March 31 totaling $87,400, of which $31,200 relates to March services. The bills post successfully to March even though the close checklist marked the A/P lock task complete, because the accounting period record shows 'Lock A/P' cleared and 'Allow Non-GL Changes' enabled. The same accountant created and approved a $45,000 manual journal on March 31; their role has Full Access and an approval limit of $100,000. System Notes show the import and the self-approval. The audit committee asks why reported March AP and expense changed after the package was issued.
1. Identify the control failures and the NetSuite settings and permissions that allowed them. What evidence would you pull?
Read the worked answer
Failures: (1) period lock - March's A/P lock was not actually set, so new bills dated March 31 posted after the package; the close checklist item was marked complete without a system check. (2) 'Allow Non-GL Changes' was enabled, which lets users change non-GL fields in a locked period and weakens the lock. (3) segregation of duties - the same accountant had Full Access, a $100,000 approval limit, and could create and approve a $45,000 journal. (4) import control - the CSV import was not reviewed or approved before posting.
Evidence: the Accounting Period record and its System Notes, the import log, each bill's System Notes, journal approval history, role permission list, and close-checklist completion timestamps. Pull the trial balance before and after April 8 to quantify the change.
2. How should the company correct the March financial statements, and what changes if the amounts are material versus immaterial?
Read the worked answer
Determine cut-off first. Of the $87,400, only amounts for services received by March 31 should be in March; the $31,200 March portion is a valid accrual, while amounts relating to April should be prepaid or April expense. If the misstatement is material, reopen March, reverse the incorrect postings, record the correct accrual, reissue the statements, and document the reason. If immaterial, post a correcting entry in April and disclose the control deficiency; do not simply leave the March package uncorrected without analysis. The $45,000 journal needs a self-approval review: if it lacks support, reverse it and re-approve through an independent approver.
3. Design preventive controls for the next close, including role and period-lock changes.
Read the worked answer
Set A/P and A/R locks before the package is distributed and 'Lock All' after final; remove 'Allow Non-GL Changes' for close roles; restrict Full Access to a small admin group; set approval limits below the role's typical journals and block self-approval through role design or approval routing; require import review and a posting report; and make the close checklist require system evidence, not just a check mark. Add a post-close watch report for any transaction dated in a locked period.