Financial Controls, Compliance, and Period Close
This domain tests the controls that protect NetSuite financial data and the steps that close an accounting period. Expect questions on role permissions, segregation of duties, approval routing, audit trail, period status, reconciliations, and the order of close tasks.
Core controls
- Role-based permissions limit access to transactions, reports, and setup. Grant the minimum needed; restrict Override Period Restrictions and Manage Accounting Periods to close owners.
- Segregation of duties: the person who enters a vendor bill should not pay it; the person who prepares a journal entry should not approve it. Use approval routing and transaction limits.
- Approval routing can apply to journal entries, purchase orders, vendor bills, and expense reports. Rules can use amount, department, class, or subsidiary.
- System Notes and Audit Trail record who changed what and when; login audit tracks access.
- Period close: reconcile bank and credit card accounts, clear Undeposited Funds, review A/R and A/P aging, post accruals and depreciation, revalue foreign currency, reconcile intercompany, run trial balance and close reports, then set the period to Closed or Locked.
Worked example
At October close, a $2,400 October utility bill arrives on 4 November. The accountant posts a 31 October journal entry: debit Utility Expense 2,400; credit Accrued Liabilities 2,400, with the October posting period. She then runs the October trial balance and income statement. The expense belongs to October even though the bill is unrecorded, so the accrual matches cost to period. When the bill arrives, it is recorded against the accrual so the expense is not counted twice. Only after reconciliations and accruals are complete should October be locked.
Traps
Locking a period before reconciliations; giving administrators routine posting rights; using a journal entry to bypass approvals; forgetting to reverse accruals; leaving Undeposited Funds uncleared; ignoring intercompany differences; not documenting the close.