A general ledger review after an acquisition is how a group finance team checks that the acquired company’s books do what a ledger is supposed to do: show and explain every transaction, with each balance tied to something real. The trial balance you receive at completion is a summary. The general ledger behind it is where the manual journals, the cut-off decisions, the suspense entries, and the top-side adjustments actually live, and those are where the surprises are. This article sets out how to review a general ledger after an acquisition: what extract to request, the six checks that find most problems, an illustrative walkthrough, and the point at which there is no ledger left to review.
Key takeaways
- Request the full transaction-level general ledger, not a summarised trial balance. The summary hides the manual journals you need to see.
- Reconcile every control account to its sub-ledger at the same date. A difference here usually means a journal was posted straight to the control account.
- Manual journals, cut-off, and suspense accounts hold most of what a general ledger review finds.
- A suspense account that nets to near zero can still contain a real unreconciled difference, hidden by entries that happen to offset.
- Where the acquired company keeps only spreadsheets or an annual trial balance, there is no general ledger to review in this sense, and it must be reconstructed first.
In this article
What a general ledger review checks
A general ledger review after an acquisition confirms that the ledger is complete, that it reconciles to its supporting detail, and that the entries in it are properly supported. It is not a re-audit. It is a targeted check on the mechanics: do the control accounts tie to the sub-ledgers, are the manual journals explained, was the period-end cut-off clean, and do the clearing accounts actually clear.
UK company law states the standard plainly. A company must keep accounting records sufficient to show and explain the company’s transactions and disclose its financial position with reasonable accuracy. A general ledger that cannot be tied back to supporting detail does not meet that test, and finding where it fails is the point of the review. It sits inside the wider sequence described in the first 100 days finance integration roadmap, as the step that makes every later number trustworthy.
Start by requesting the right extract
The quality of the review depends on the extract. Ask for the full general ledger at transaction level, covering the last two complete financial years and the current period to date, exported from the local accounting system in its native format. It must keep the journal source, the posting user, and the posting date as separate columns.
That last point matters more than it sounds. The source and user columns are what let you separate system-generated postings, which flow from sub-ledgers automatically, from manual journals, which a person decided to post. A general ledger handed over as a PDF trial balance strips exactly those columns, so it hides the manual entries that a review exists to examine. If the only extract offered is a summary, that is itself a finding about the acquired company’s records.
The six checks that find most problems
Run these six checks in order. The first two decide whether the ledger is reliable at all; the rest find the specific entries worth questioning.
| # | Check | What a problem looks like |
|---|---|---|
| 1 | Control accounts to sub-ledgers | A control balance that does not tie to the AR, AP or stock sub-ledger |
| 2 | Manual journals | Journals with no narrative, no support, or posted by one person alone |
| 3 | Period-end cut-off | Revenue or cost journals dated in the last days of the period |
| 4 | Suspense and clearing | Balances older than one closing cycle, or offsetting entries |
| 5 | Round-sum and top-side entries | Large round numbers posted to reach a target result |
| 6 | Related-party and unusual postings | Entries to directors, owners, or accounts used only once |
1. Control accounts to sub-ledgers. Tie each control account to its sub-ledger at the same date. The common failure mode is a control account that does not reconcile because a manual top-side journal was posted directly to it, bypassing the sub-ledger, so the two drift apart with no visible cause. For receivables this links straight into the detailed accounts receivable review after an acquisition.
2. Manual journals. Filter the ledger to manual postings using the source column, then sort by value. Every large manual journal needs a narrative and support. A manual journal with a one-word narrative near period end is the single most productive thing to question in the whole review.
3. Period-end cut-off. Look at journals dated in the last five days of each period and the first five of the next. Cut-off errors move profit between periods, and after an acquisition they move it across the completion date, which is exactly where it changes who owns the result.
4. Suspense and clearing accounts. Read the contents, not the balance. A suspense account can net to near zero and still hold a real unreconciled difference, because unrelated entries happen to offset. Intercompany clearing is a frequent culprit and is covered in the guide to reconciling intercompany balances after an acquisition.
5. Round-sum and top-side entries. Round numbers rarely occur naturally in a ledger built from real transactions. A journal of exactly EUR 50,000 posted on the last day of the year is usually an adjustment to reach a target, not a recorded event, and it needs the same support as any other entry.
6. Related-party and unusual postings. Scan for entries to owners, directors, or accounts that were used once and never again. These are not automatically wrong, but in an owner-managed business acquired by a group they are where personal and company costs most often blur.
Illustrative example: a EUR 9m target
The figures below are illustrative, not a real engagement. A group reviews the general ledger of a EUR 9m-revenue target before its first group close. The control account check shows the AR control EUR 60,000 higher than the sub-ledger, traced to a manual top-side journal posted to clear an old query. Manual-journal filtering surfaces three round-sum entries totalling EUR 110,000 with one-line narratives, two of which lack support. The suspense account nets to EUR 4,000 but contains EUR 70,000 of gross entries, one of which is a genuine EUR 18,000 difference. Total questioned items: EUR 188,000 gross, found in roughly ten days of work, before any of it reached the group numbers.
Keep in-house, resource the volume
Deciding what a questioned journal means, and whether it is an error, a policy difference, or something that needs a conversation with the seller, stays with the group finance team. Extracting, filtering, and tying out thousands of lines across several entities is volume work, and it is usually what makes the review arrive late rather than the judgement itself.
Where a general ledger review stops working
This review assumes the acquired company runs an accounting system that can export transaction-level detail with source and user columns intact. Where the company keeps its books in spreadsheets, or produces only an annual trial balance with no monthly ledger, there is no general ledger to review in this sense. The work changes from reviewing a ledger to reconstructing one, which is a different and longer job. The honest first step there is a post-acquisition data check to establish what records actually exist, and an assessment of the acquired finance function to judge whether it can produce them. For the wider list of what to examine first, see what a CFO should review after an acquisition.
Facing a ledger you did not build and a group close on the calendar? Discuss your finance integration project with our team.
FAQ
What is a general ledger review after an acquisition?
It is a targeted check that the acquired company’s ledger is complete, reconciles to its supporting detail, and contains only properly supported entries. It confirms that control accounts tie to sub-ledgers, manual journals are explained, cut-off is clean, and suspense accounts clear. It is not a full re-audit, but a check on the mechanics that every later number depends on.
What should you request for a general ledger review?
Request the full transaction-level general ledger for the last two complete financial years plus the current period, exported from the local system in its native format, with the journal source, posting user, and posting date as separate columns. Those columns let you separate automatic postings from manual journals, which is where most review findings sit.
Why not just review the trial balance?
A trial balance is a summary of the ledger, so it hides the detail a review depends on: manual journals, cut-off entries, suspense movements, and top-side adjustments. Reviewing only the trial balance confirms the numbers add up, not that they are supported. The general ledger is where you see what actually happened.
What is the most common problem a general ledger review finds?
A control account that does not reconcile to its sub-ledger, usually because a manual journal was posted directly to the control account and bypassed the sub-ledger. Close behind are unsupported round-sum journals near period end and suspense accounts that net to near zero while hiding a real unreconciled difference.
Brahim Rami | Member of institute of chartered accountants in Morocco
He is a CPA and tax advisor, founder of NeoExpertise.net, a Legal and Tax firm helping foreign companies with business setup, due diligence, payroll, and tax compliance in Morocco and Africa.
