Timing differences (cut-off, bill-and-hold)

Revenue or expense is recorded in the wrong period: sales recognized before delivery or acceptance, bill-and-hold arrangements without substance, expenses deferred, or the books held open after period end.

Partly covered. The remaining analysis needs receivables data, which is planned.

Starter pack: Journal entry testing

Red flags

In the data

• Entries posted after the close date with effective dates in the closed period
• Revenue spikes at period end followed by reversals
• Credit memos early in the next period against late-period sales

Behavioral

• Management pressure to meet period targets
• Unusual shipping arrangements at period end

Internal controls

• Periods not locked after close
• No review of entries posted after close