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A listed company's ICOFR weakness states 'no procedures to ensure all postings have occurred in the correct period'. The MOST direct ERP control to address this is:
AAllowing reopening of closed periods on request
BOutsourcing the financial close
CIncreasing the frequency of management estimates
DConfiguring accounting-period controls in the ERP, locking periods after close and reviewing posting-date vs transaction-date discrepancies for each period
Answer & Solution
Correct answer: D. Configuring accounting-period controls in the ERP, locking periods after close and reviewing posting-date vs transaction-date discrepancies for each period
Period-end controls — locking periods after close and detecting any postings whose posting-date differs from the period of the transaction-date — are the targeted fix for cut-off integrity in the ERP. Reopening periods on request defeats the control; estimates and outsourcing don't address cut-off.
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