Review of the annual accounts: the four-eyes principle at the firm

The short answer

A review under the four-eyes principle means that someone other than the preparer reviews the draft before it goes to the client. Good software records who prepared, who reviewed and what was approved. In Jaarrekening.io, preparer, reviewer and approver are separate roles, and the database enforces who may take which step.

Why a second pair of eyes

Whoever has built an annual accounts file themselves is worst at seeing their own errors. A colleague who reads the file cold finds the reconciliation that does not match or the note that no longer fits the figures.

For accountants, a form of quality management follows from the professional rules. Trade associations of bookkeeping firms have comparable rules, such as the NOAB's quality management rule. How heavy the review is, your firm decides per engagement.

What a reviewer looks at in every file

• Does equity reconcile with last year, with the result and distributions as the difference?
• Are the comparative figures stated and, where necessary, restated and explained (art. 2:363(5) DCC)?
• Is the size class correct, and do the exemptions follow from it?
• Do the accounting policies fit the line items, and have they been applied consistently?
• Have going concern and events after the balance sheet date been discussed with the client?
• Do the amounts in the text of the notes match the figures?

The roles in Jaarrekening.io

Those rights are more than a button on the screen. The database refuses submitting, reviewing or approving by a role that is not authorised to do so. An administrator may do everything; keep that role small if you want to safeguard the separation between preparing and approving.

What must be right before the financial year is internally approved

Only an administrator or approver can internally approve the financial year, and only if:

• the financial year has been settled;
• the assessment of the reporting regime has been fixed;
• the trial balance has been validated;
• the mandatory sections of the notes and, where required, the management report have been approved.

The approval is an internal fact in the file. The platform says so as well: this is not an adoption resolution and does not register a filing. Preparing and signing is done by the board. Adopting is done by the body that is competent under the law and the articles of association: for a BV or NV the general meeting, for a foundation not necessarily.

Comments, versions and audit trail

For each section of the annual accounts, a checker can place comments, which the preparer handles and closes. The trial balance has a version history, so that it stays visible which figures the draft rests on.

Changes to entities, financial years, trial balances, fixed figures, publication versions and team members are recorded in an audit trail with author and time. A dedicated screen to view that audit trail per file is currently not available to firm users. A word-by-word view of text changes, like track changes in a word processor, is not available either.

If an annual accounts file that has already been filed must be corrected, that is a separate process outside the review; see correcting a filed annual accounts file.

Review per engagement in Client management

In the Client management module, every engagement has a status pipeline: open, documents requested, in progress, review (four eyes), client approval, submitted and completed. During the review, the reviewer records findings with their severity and approves or rejects. The reviewer may not be the person who carried out the work.

The engagement review belongs to Client management and is therefore only usable once that module has been enabled for your firm; it is not yet in the app menu. The roles and the section approval in the annual accounts themselves work without that module. If you want to use the module, please contact us; the amounts for the modules you can add are on the pricing page.

Read more