This portion of the book is focused on closing information and procedures related to the balance sheet substantiation and material transaction substantiation.

A balance sheet provides a snapshot of an entity’s financial position or health at a given time. As a result, IU strives to be as accurate as possible in its financial reporting. To help increase accuracy, the Office of the University Controller (UCO) requires all non-system-generated balance sheet amounts above a threshold be supported by detailed documentation at the object code level.

Material transaction substantiation at IU refers to detailed documentation and work papers substantiating transactions that exceed a certain threshold. Substantiating material transactions is an important tool for account management and preparation for external audits. Reviewing material financial transactions helps identify potential transaction issues or errors before balances are finalized for a period-end close.

The substantiation review is a key process during interim and year-end close. Detailed substantiation provides greater assurance that the financial statements are accurate, improves transparency, and helps to reduce risk. Without substantiation, auditors are unable to verify balance sheet balances and material transactions, which could lead to audit findings with major negative impacts.