We would like to share examples of internal control deficiencies.
We hope that this case will help enhance your practical understanding of internal control requirements.
[ Transaction in September, Posted in October?
Record It in the Right Period! ]
Case of Inadequate Cut-off Validation
[Issue]
① Journal Entry Posted Using the Invoice Receipt Date
-The journal entry was recorded based on the invoice receipt date (October 1) rather than the actual transaction date specified in the invoice. (September 30)
② Insufficient Period-End Journal Entry Review Procedures
- Inadequate review of differences between transaction dates and journal entry dates during the month-end closing process.
③ Cut-off Violation
- September expenses were recognized in October, resulting in distortion of monthly and quarterly financial results.
[Best Practice]
① Verify the Actual Transaction Date When Posting Journal Entries (Business Department)
- Record journal entries based on the actual transaction date rather than the invoice receipt date.
- Pay particular attention to transactions occurring around month-end.
② Joint Review of Unreceived Transactions During Period-End Closing (Business & Finance Departments)
- Perform monthly reviews of unreceived invoices and invoices issued but not yet
recorded in the accounting system.
③ Conduct Post-Closing Cut-off Monitoring (Finance Department)
- identify recurring cut-off errors and implement corrective actions to prevent
recurrence.
[Contact Us]
Please contact to the email below if you have any questions.
jeb527@hyundai.com (Accounting Policy Team, Eunbyeol Jo Manager)
This newsletter has been sent for executives and employees to comply with K-SOX training obligation under the Korean External Audit Act (Enforcement Decree Article 9)