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The internal control principle of separation of duties requires that different individuals be assigned responsibility for different elements of related activities, particularly those involving authorization, custody, or recordkeeping. Having the journal review and approval process in place ensures that all general journal entries get reviewed. This review is done to help prevent errors such as adjusting the wrong accounts and transposing numbers. It also helps protect against fraud by making sure there is a valid reason for the journal entry and someone is not manipulating the accounts for vested interests.
In the case of journal recording the journal entered by one person needs to be approved by another person in this step. This ensures having more than one person to complete the “Journal Creation Task”. In GL the separation by getting the financial transaction approved by more than one individual prevents fraud and error. Automated accounting systems provide you with the functionality of sending the journals for approval to the designated person. The system will validate the journal batch, determine if approval is required, and submit the batch to approvers (if required), then notify appropriate individuals of the approval results. Review and Approval must happen before the journal is posted and balances are updated. ERP Systems provide review capabilities by providing a workflow framework to route these transactions to appropriate users based on the rules defined in the system. Automatic notifications are sent to the person who needs to take action.