Year-end close gets the scrutiny; Q2 close often doesn’t. That’s backwards. A misstep caught in July is a journal entry; the same misstep caught in January is a restatement conversation. Five review items are worth pulling forward into the Q2-to-Q3 window specifically because they compound quietly if left alone.

None of these five require a special project. Each one is a targeted check a controller can run against the existing close package — the point is to build them into the Q2-to-Q3 review cadence rather than waiting for the Q4 audit to surface them for the first time.

1. Accrual Completeness

Accruals are where small process gaps turn into recurring, growing errors:

• Confirm auto-reversal is actually happening. Accruals should reverse on Day 1 of the next period so the real invoice, when it lands, doesn’t get double-counted.
• Check for the most common failure mode. An accrual that didn’t reverse properly is the most frequent cause of a duplicate expense showing up the following month.
• Require documentation on every accrual. Entries without support are one of the most common — and most avoidable — audit findings.

2. Revenue Cut-Off

Cut-off errors under ASC 606 are usually judgment problems, not math problems:

• Revisit bundled arrangements first. Contracts with multiple deliverables are where performance-obligation identification and price allocation most often go wrong.
• Reconcile invoice date to recognition date. Timing differences between when something is billed and when it’s actually earned are a recurring source of manual correcting entries.
• Document the judgment calls. Variable consideration, contract modifications, and distinct-performance-obligation determinations need a documented rationale, not just a spreadsheet.

3. Receivable Collectability

CECL changed the mechanics of the allowance for credit losses on trade receivables, and it’s worth confirming the Q2 numbers actually reflect the new model:

• Confirm the model is forward-looking, not incurred-loss. CECL requires an estimate of expected losses over the life of the receivable, recorded up front — not held back until a loss looks probable.
• Check the provision matrix inputs. Aging-based loss rates should be supplemented with current conditions and reasonable, supportable forecasts, not just historical averages.
• Don’t forget current receivables. Even invoices that are current or not yet due are now expected to carry some allowance under CECL.

4. Impairment Indicators

Goodwill testing is an annual event, but the indicators that trigger an interim test can show up any quarter:

• Watching goodwill triggering events. Adverse changes in business climate, declining market capitalization, or industry-wide demand declines can require an interim test outside the normal annual cycle.
• Review long-lived assets for recoverability signals. Significant underperformance against projections, a change in how an asset is used, or negative industry trends are all reasons to test — regardless of the calendar.
• Document the “no triggering event” conclusion too. If Q2 review concludes no interim test is needed, that conclusion and its basis should be documented, not just assumed.

5. Unusual Journal Entries

This is the review item most directly tied to fraud risk, and it has a well-defined set of red flags to screen for:

• Unusual accounts or unusual preparers. Entries to seldom used accounts, or made by people who don’t normally post journal entries, warrant a second look.
• Period-end and post-closing entries with thin explanation. Entries recorded right at close, with little or no description, are exactly the pattern auditors are trained to flag.
• Round numbers and manual, top-side entries. Manual entries bypass automated controls, and top-side entries are the ones most susceptible to management override.

Five Items, Five Minutes Each

Bottom Line

None of these five items require a special year-end project — they’re a Q2-close review, done with the same rigor as the close itself. The value of doing it now instead of in Q4 is entirely about timing:

• An accrual off by one missed reversal.
• A cut-off judgment missing documentation.
• An allowance model that wasn’t actually updated.
• An impairment indicator nobody flagged.
• A journal entry that fits the fraud-risk pattern.

Every one of these is a five-minute fix in July and a much longer conversation in January.

The common thread is documentation. In every one of these five areas, the difference between a clean Q3 and a difficult one usually isn’t whether the underlying judgment was reasonable — it’s whether that judgment was written down at the time it was made, while the reasoning was still fresh and the supporting data was still on hand.

Sources and Professional Notes

• FinOptimal, “How to Reconcile Accruals: A 5-Step Month-End Checklist.”
• Leapfin, “4 Most Common Revenue Recognition Challenges.”
• Blue & Co., LLC, “Application of CECL to Accounts Receivable.”
• BDO, “Goodwill and Impairment,” BDO Accounting, Reporting, and Compliance Hub.
• Rillet, “Journal Entry Testing: How Auditors Detect Fraud.”

Prepared: August 2026  ·  Last technical review: August 2026  ·  Reviewed by: [PNJ reviewer]

Disclaimer

This material is for general informational purposes only and does not constitute accounting, tax, or legal advice. Application of ASC 606, ASC 326, and goodwill/long-lived asset impairment guidance depends on an entity’s specific facts and contracts. This article is a general summary and is not a substitute for reviewing the applicable standards directly or obtaining advice based on specific circumstances. Consult qualified advisers before changing accounting processes or conclusions.