What is Close Review and Approval?
Definition
Close Review and Approval is the finance control activity of reviewing, validating, approving, and signing off close outputs before financial results are finalized. It covers journals, reconciliations, entity submissions, variance explanations, reporting packs, and supporting evidence. Strong review and approval discipline supports accurate financial reporting, operational efficiency, and reliable business performance visibility.
How Close Review and Approval Works
Close review and approval begins after preparers complete close tasks. Reviewers validate the accuracy, completeness, documentation, and timing of each item before approval. For example, a controller may review accrual journals, balance sheet reconciliations, intercompany entries, and management reporting schedules before final sign-off.
The activity is usually aligned with the Close Calendar (Group View) so reviewers know when journals, reconciliations, and reporting packs must be approved. This ensures that final results are not released until key controls and review steps are complete.
Core Components
Preparer submission: completed close task with supporting evidence and explanation.
Reviewer validation: check of accuracy, completeness, account movement, and documentation.
Approval authority: formal sign-off by the responsible controller, manager, or finance leader.
Exception follow-up: action on open issues, missing support, or unusual balances.
Audit trail: timestamps, comments, attachments, and approval history.
Finance Use Cases
Close review and approval is used in month-end close, quarter-end reporting, year-end close, shared services, and group consolidation. It supports Analytical Review (Journal Entries) by checking unusual postings, material adjustments, recurring accruals, and late journals before reporting is finalized.
It also supports Cash Flow Statement Review, Working Capital Performance Review, and Close Performance Review because approved results are needed before management commentary and executive reporting can be completed.
Controls and Governance
Close review and approval strengthens Segregation of Duties (Close) by separating task preparation from review and approval. This is important for sensitive areas such as revenue, cash, tax, provisions, intercompany, and manual journals.
It also supports Close External Audit Readiness because reviewers leave a clear evidence trail showing who approved each item, when it was approved, and what support was reviewed. For system-controlled approvals, User Access Review (Data) helps confirm that only authorized users can approve or modify close outputs.
Key Metric and Example
A practical metric is:
On-Time Close Approval Rate = Close Items Approved by Deadline ÷ Total Close Items Due for Approval × 100
For example, if 380 close items require approval and 361 are approved by deadline, the on-time close approval rate is 361 ÷ 380 × 100 = 95%. If the target is 98%, finance leaders can review delays by approver, entity, task type, or reporting impact.
Business Impact
Strong close review and approval improves reporting confidence, accountability, and decision readiness. It ensures that results reviewed in a Monthly Business Review (MBR) or Quarterly Business Review (QBR) are based on validated close outputs.
Best Practices
Define approval levels by account risk, transaction value, entity, and reporting impact.
Separate task completion, reviewer validation, and final approval.
Require evidence for material journals, reconciliations, estimates, and adjustments.
Track overdue approvals daily during the close window.
Review recurring approval delays after each close cycle.
Summary
Close Review and Approval ensures that financial close outputs are checked, validated, and formally approved before reporting is finalized. It connects close tasks with ownership, controls, evidence, audit readiness, and management review. For finance leaders, it improves operational efficiency, financial reporting quality, cash flow visibility, and business performance confidence.
